Reinsurance helps to protect the insurance company against their exposure and losses, which occurs by natural disasters. By the means of reinsurance process, a company shares part of its risk with other companies. Reinsurance provides assurance that insurance company can remain financially feasible if any type of catastrophe happens like a major hurricane. Furthermore, profits may be earned by purchasing policy and companies can avoid the fatalities by passing risk. China is the highest populated country in the world, owing to this its reinsurance market is expected to witness rapid growth during the forecast period.
Insurance infiltration in China is severely low. However, the region is susceptible to a range of natural catastrophe including earthquake, hurricane, and others. These all factors hamper economic development and sustainability in case of natural hazards. New parameters are established to expand a competitive market by developing new products, which are suitable for consumers. The government is supporting towards the growth of private sector in the insurance industry for the enhancement public health insurance.
According to the research, the China reinsurance market was valued at around USD 35.0 billion in 2013 and is expected to reach at USD 198 billion by 2020, growing at CAGR of slightly above 40% from 2014 to 2020.
Reinsurance is segmented into two methods, namely, facultative reinsurance and treaty reinsurance. Treaty reinsurance further divided into proportional and nonproportional types. Reinsurance premiums will increase at an annual growth rate of approximately 12% over the next few years. According to the Ministry of Health of China, public expenditure on healthcare rise around 20% from the previous year. The non-life segment’s share is estimated to shows healthy growth from slightly over 34% to 40%.
The China reinsurance market competitive segments include both domestic and foreign reinsurers. There are some leading global reinsurance companies such as Swiss Re, Munich Re, Lloyd’s Insurance Company (China) Ltd, China Life Reinsurance Company Ltd, and Taiping Reinsurance Company Ltd. The China Re and Central Huijin Investment Corporation accounted for around 84% share of China reinsurance industry in 2013.
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