Insurance industry will have a bright future as projects under the Belt and Road Initiative contain huge potential for premium growth, said experts.
According to the latest data from China's Ministry of Commerce (MOC), in the first three quarters of the year, the Chinese enterprises' newly-signed foreign contracted projects with relevant countries along the Belt and Road routes increased 26.1 percent from a year earlier, with the project value accounting for 50.4 percent of amount of the newly-signed foreign contracts in the same period.
The latest report of the Swiss Re, a leading global reinsurer, shows that at present, amount of the already planned projects under the Belt and Road has reached 1.2 trillion U.S. dollars.
It is estimated that these projects will generate about 7 billion U.S. dollars of premium, of which 5.5 billion U.S. dollars of premium will likely belong to the Chinese insurance companies.
The report also pointed out that from August 2016 to 2030, the follow-up construction projects under the Belt and Road are expected to bring about 27 billion U.S. dollars of premium, of which 16 billion U.S. dollars of premium will likely belong to the Chinese insurers.
As a matter of fact, in order to encourage insurance's participation in the infrastructure investment, the China Insurance Regulatory Commission (CIRC) expanded investment scope of the insurance companies in the infrastructure projects in 2015.
When investing the infrastructure projects, the insurance companies are not subject to approval of the regulators any more.
Meanwhile, the Belt and Road construction will help improve the infrastructure, such as the transportation and logistics centers, and further promote development of the bilateral trade.
Industry insiders estimated that by 2030, total trade under the Belt and Road will reach 4 trillion U.S. dollars annually, about four times the current trade amount.
Therefore, with demands for the trade credit insurance and cargo insurance increasing, the insurance industry will embrace a huge opportunity.
For years, the Chinese insurance companies have offered more and more risk guarantees to the Chinese enterprises participating in the overseas business and trade activities.
With construction of the Belt and Road and the increase in the bilateral trade agreements, demands for commercial insurance will increase further. The Swiss Re estimated that during the period from 2015 to 2030, trade activities under the Belt and Road will bring 1.5 billion U.S. dollars of premium income to the Chinese insurance companies, of which 600 million U.S. dollars of premium income came from the trade credit insurance.
Within the permitted scope of laws and regulations of the host countries, the Chinese insurance companies should pay attention to developing the best long-term partnership and build partnerships with the local companies.
The insurance companies should also further understand customers' demands and develop corresponding products.
For example, in many cases, natural disaster has a big impact on progress of the construction projects. However, enterprises usually cover project risks in the project construction stage, but these insurance policies do not include natural disaster risk guarantees, said Jie Jingwei, CEO of the Swiss Re's China operations.
In addition, more and more customers hope to get customized and integrative insurance solutions.
Therefore, the insurance companies should make preparations. Developing customized risk solutions can not only offer more effective risk guarantees for enterprises' overseas economic and trade activities, but also reduce the cost of insurance to the minimum level, said industry insiders.
Latest comments