China's Insurance Sector to See Slow but Quality Growth Next Year
China's insurance premium growth is expected to hit a break in 2022 as more regulations launched this year are expected to make the growth more sustainable and solid, according to Swiss Re, one of the world's leading reinsurance companies.
"We expect China's life insurance premium income to grow 3 percent next year and 4.2 percent in 2023, which is slower than the average growth of 7 percent before the pandemic," said Jerome Haegeli, chief economist of Swiss Re. "That means the regulator is focusing more on the quality of the growth, which is good for the resilience and sustainable development of the country's economy."
In the non-life insurance sector, a growth of 7.6 percent is expected in 2022 and 11 percent in 2023, which is also slower than the average growth before.
"Decarbonisation and digitalisation will reshape the economy and also bring more positive changes to the insurance industry," said Haegeli.
Swiss Re Institute's latest sigma study forecasts the global insurance industry to reach a new record in global premiums by mid-2022, exceeding $7 trillion. This comes earlier than Swiss Re estimated in July and reflects rising risk awareness, increasing demand for protection and rate hardening in non-life insurance commercial lines. The insurance industry outlook is also supported by a strong cyclical recovery from the COVID-19 shock, but economic growth is expected to slow down in the next two years due to an unfolding energy price crisis, prolonged supply-side issues, and inflation risks. Long-term structural support for growth is needed, Swiss Re Institute's resilience analysis in this sigma report shows.
Climate change and digitalisation are significant trends shaping the world economy and insurance markets. Rapid decarbonisation is becoming imperative and societies' approach to transitioning to a green economy will determine the economic outlook.
The insurance industry can support the transition to a low-carbon economy, not only by absorbing disaster losses but also by promoting sustainable infrastructure investments that help mitigate the impact of volatile extreme weather. Adopting digital technologies is not only playing a role in increasing global productivity growth, but Swiss Re research also found that the pandemic has transformed consumers' receptiveness to interacting with insurance digitally, pointing to growth potential.
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