Reinsurance in China yet to reflect size of the direct insurance market
Source: Asia Insurance Review | Dec 2019
While the mainland Chinese insurance market has grown to become the second largest in the world, the domestic reinsurance market posted total premiums of only about CNY180bn ($25.7bn) in 2018, accounting for 8.5% of the global market, a senior CBIRC official has said.
CBIRC director of the P&C insurance department Li Youxiang, who was speaking at a reinsurance conference in Shanghai in November, indicated that the scale of reinsurance business in China does not reflect the size of the direct insurance market. He explained that China’s reinsurance industry is still in the initial stage of development, with a history of around 20 years.
As regulator, the CBIRC will improve the supervision system and transactional modes to promote reinsurance, said Mr Li. For example, the CBIRC coordinates the customisation of the issuance of reinsurance VAT vouchers to improve settlement efficiency and encourages the reinsurance industry to use advanced blockchain technology to test new settlement models.
Mr Li said that reinsurers should be adept at employing IT, and in particular use blockchain to achieve breakthroughs in innovation. This would contribute to resolving issues like information asymmetry and the low level of information, and enhancing business capabilities. A
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