After a period of slowing down, China’s insurance industry is on the upswing again. Measures announced at the end of last year should shape a resurgence, further liberalising the country’s US$40 trillion financial sector. The proposed measures – when they come into effect – will raise caps on foreign ownership in China’s life insurers and other financial entities, eventually scrapping limits entirely. Expanding the market shares of foreign stakeholders still has a long way to go, however.
Opening the door to foreign stakeholders will come in the wake of draft rules to rein in wayward elements in the industry and raise standards of compliance and equity. Tighter regulatory policies on asset liability management (ALM), corporate governance, solvency and accounting standards, among other aspects, should test domestic insurers, asset managers and other financial institutions. The government’s takeover of a prominent insurer in early 2018 is a signal to the industry that it needs to pay more attention to ALM and risk management in order to adopt a sustainable business model. This could be a positive development. How local insurers adapt to this changing environment will determine their future profitability, and affect their ambitions of investing overseas.
Digital technology is another potent force moulding the insurance industry, driving companies to innovate in products and services – to the benefit of customers. For China’s technology giants, this is a huge domestic opportunity where they would clearly lead foreign rivals. How will they retain their edge? How can insurers raise their competitive ability in this strict environment?
The FT China Insurance Summit: Reshaping a resurgent industry is the second in the series. It will bring together leading insurers, regulators, asset managers and technology experts from China and overseas to discuss the best strategies to compete in the digital era, and benefit from a planned easing of the financial sector, even as much-needed curbs are imposed on unruly elements.
* Proceedings will be mainly in Mandarin. Simultaneous translation will be provided at the summit.