Reinsurers pivotal to supporting China’s cat insurance system: Taiping Re’s Sheldon Yu
September 26 2024 by Georgina LeeThe Chinese government has stated its intention to promote a catastrophe insurance system that will run along market principles, as regulators seek to improve the country’s response to natural catastrophes, which have caused direct economic losses of CNY93.2 billion (US$12.8 billion) in 1H 2024.
Taiping Re is actively participating in the construction of China’s catastrophe insurance system through its mainland subsidiary Taiping Re (China), said Sheldon Yu, chief executive officer of Taiping Re.
“Taiping Re continues to expand the coverage of catastrophe insurance business. We use the Chinese Catastrophe Pool as a channel, combines government needs and regional disaster conditions, and provides technical support to seek new business opportunities,” Yu said.
The reinsurer is also strengthening its research on catastrophic risks.
“In recent years, we have participated in Chinese Catastrophe Pool projects and some municipal projects and participated in risk assessment and product design. As we continue to accumulate project experience, we will provide more catastrophe reinsurance protection within our risk appetite,” he added.
Taiping Re will also promote the innovation of catastrophe insurance products and services. It fully considers regional differences and combines actuarial quantification assistance to our catastrophe insurance products.
“Hong Kong financial institutions and investors can provide necessary capital support for the mainland insurance market and enhance underwriting capacity by investing in mainland insurance companies or insurance products.” Sheldon Yu, Taiping Re
The chief executive said: “Our focus is also on providing risk-reduction services. Since 2019, we have cooperated with professional institutions to develop and upgrade the natural disaster analysis platform along the ‘the Belt and Road’, providing professional risk management services for enterprises that seek to expand their business overseas.”
“In 2023, we participated in five government catastrophe projects, including Chinese Catastrophe Pool projects, and provided underwriting capacity support for earthquake index reinsurance treaties in two cities in Yunnan Province. Taiping Re is also involved deeply in price estimation and product design.
“Going forward, the scope and depth of our participation in catastrophe insurance will continue to improve,” he added.
Taiping Re is also conducting research on Hong Kong flood catastrophe risk by cooperating with universities and scientific research institutions.
“Our goal is to improve the pricing capability on catastrophe insurance and provide support for risk reduction services and product innovation in the Greater Bay Area,” according to Yu.
Industry collaboration
The insurance and reinsurance industries in China attach great importance to risk reduction.
Reinsurers can cooperate with insurance companies and professional organisations to provide meteorological disaster warnings for typhoons, floods, and other disasters, helping insured companies identify potential risks and reduce expected losses.
Taiping Re (China) actively participates in government-promoted catastrophic insurance projects to prevent catastrophic risks, safeguard people’s livelihoods, and reduce the pressure on the government to prevent and mitigate disasters. The demand for catastrophic insurance protection in various regions is also constantly increasing.
HK’s role in cat risk mitigation
As an international financial centre, Hong Kong has strong capital strength and abundant financial resources.
“Hong Kong financial institutions and investors can provide necessary capital support for the mainland insurance market and enhance underwriting capacity by investing in mainland insurance companies or insurance products,” Yu said.
In recent years, some domestic insurance institutions have issued catastrophe bonds in Hong Kong to protect against catastrophe risks in the mainland, which is also a beneficial attempt to deal with natural disaster risks.
Yu said: “The Hong Kong insurance market has strong product innovation capability. By introducing Hong Kong or international insurance products through channels in the city, we can learn from product and risk management concepts to develop catastrophe insurance products that meet the needs of the mainland market.”
Reinsurance is an important means to disperse and transfer insurance risks. As one of the international reinsurance centres, Hong Kong can provide reinsurance support to the mainland insurance industry, Yu added.
-
HSBC Asset Management | The hunt for diversification and performance revitalizes appetite for Asian currency bonds
With diversification and performance high on investors’ agendas, it seems a good time for global portfolios to revive allocations in Asian local currency bonds – including Hong Kong dollar (HKD) bonds.
-
PineBridge Investments | Why Asian insurers are exploring private credit and CLOs
The recent rollout of risk-based capital regimes across Asia calls for a closer alignment between insurers’ assets and liabilities. We explore potential ways to maintain a healthy investment yield and robust returns on regulatory capital.
-
Peak Re | Emerging Asia middle class: A catalyst for change
Rising demand for elderly care and women driving consumption growth mandate carriers to develop precise solutions to meet customer expectations.
-
Guy Carpenter | Private equity’s reshaping of the Asian life sector has further to run
PE-backed reinsurers provide access to asset classes and investment expertise that often don’t exist within the traditional carriers themselves.