1. Insurance assets only account for 7% of the total financial assets in China, while the international average is around 20%; 2. The number of people covered by major illness insurance in China has reached 1.2 billion, and the retirement reserve accumulated by the insurance industry is over 6 trillion yuan; 3. In terms of compensation for losses in major disaster accidents, the proportion borne by the insurance industry in China is only 10%, while the global average is as high as about 40%.
On June 19th, Li Yunze, the head of the China Banking and Insurance Regulatory Commission, stated at the 2024 Lujiazui Forum that the insurance industry has great potential to serve the modernization of China. The industry should focus on finding the key points of insurance services for Chinese-style modernization: First, focus on innovation and development, provide precise and efficient services for new production forces; Second, focus on people's livelihood and welfare, better meet the needs of the people for a better life; Third, focus on safety and emergency, continuously promote the improvement of social governance effectiveness, deepen reforms and enhance the high-quality development momentum of the insurance industry.
Regarding improving economic resilience and enhancing market vitality, Li Yunze pointed out that strengthening insurance funds is conducive to cultivating "patient capital," smoothing out economic cyclical fluctuations, and promoting a virtuous cycle of "funds-capital-assets."
Zhou Jin, a managing partner at PwC China's financial management consulting department, told Cai Lian news reporter that insurance funds, as scarce "patient capital" in the market, can well meet the financing needs of technology innovation enterprises and provide full-cycle financial services for technological innovation enterprises. On the asset side, insurance capital should leverage its advantages as a "patient capital," adhere to long-term value investment, and obtain returns that span the cycle.
In order to tailor insurance products for new urban residents and flexible employees, Zhou Ling, a PhD in social security from Beijing Normal University and associate professor at Beijing City University, suggested that insurance companies should conduct in-depth research on the diverse needs of those in need of protection, and accelerate the cultivation and establishment of professional personnel for inclusive insurance.
Regarding the construction of the Shanghai Reinsurance Transaction Center, Zhu Shaojie, an expert in the insurance department of Shanghai University of International Business and Economics, suggested that the insurance industry should seize the window of opportunity for digital transformation, establish a competitive advantage in digital reinsurance transactions, and continuously improve the transaction support functions of the reinsurance registration and clearing platform, making Shanghai a highland for leading the digital and intelligent transformation of the global insurance industry.
Strengthen insurance funds and promote a virtuous cycle of "funds-capital-assets."
Li Yunze stated that from the perspective of financial structure, insurance industry assets account for only 7% of the total financial assets in China, while the international average level is around 20%. Therefore, accelerating the development of the insurance industry is conducive to improving the structure of the financial market, optimizing the allocation of financial resources, and enhancing the stability of the financial system. On the one hand, from the perspective of fund supply and demand, insurance funds have a long duration and cross-cycle attributes. Strengthening insurance funds is conducive to cultivating "patient capital," smoothing out economic cyclical fluctuations, and promoting a virtuous cycle of "funds-capital-assets." On the other hand, from the perspective of safeguarding range, the connotation and extension of insurance protection are constantly expanding and enriching. Keeping pace with the times to establish a broad view of insurance can provide effective buffers and risk barriers for the stable operation of the economy.
Li Yunze introduced that from the perspective of fund structure, insurance industry assets account for only 7% of the total financial assets in China, while the international average level is around 20%. Therefore, accelerating the development of the insurance industry is conducive to improving the structure of the financial market, optimizing the allocation of financial resources, and enhancing the stability of the financial system. On the one hand, from the perspective of fund supply and demand, insurance funds have a long duration and cross-cycle attributes. Strengthening insurance funds is conducive to cultivating "patient capital," smoothing out economic cyclical fluctuations, and promoting a virtuous cycle of "funds-capital-assets." On the other hand, from the perspective of safeguarding range, the connotation and extension of insurance protection are constantly expanding and enriching. Keeping pace with the times to establish a broad view of insurance can provide effective buffers and risk barriers for the stable operation of the economy.
Focusing on innovation and development, Li Yunze pointed out that it is necessary to provide precise and efficient services for new production forces. In his view, the significant feature of new production forces is innovation, and insurance funds should increase their support for strategic emerging industries, advanced manufacturing industries, new infrastructure, and venture capital.
Zhou Jin said that insurance funds, as scarce "patient capital" in the market, can well meet the financing needs of technology innovation enterprises and provide full-cycle financial services for technological innovation enterprises. In his view, as an important factor of high-quality sustainable development, insurance companies should do a good job of asset-liability management.
Zhou Jin suggests that from the liability side, insurance companies should do a good job of product pricing and insurance risk management, fully consider the trends of the interest rate environment and the capital market, and adjust the product structure and capital costs in a timely manner; from the asset side, insurance capital should leverage its advantages as a "patient capital," adhere to long-term value investment, and obtain returns that span the cycle; from the perspective of asset-liability matching, it is necessary to balance the impact of asset-liability matching on objectives such as profitability, value, and solvency.
It will promote the speedy complementation of the "third pillar" and tailor insurance products for new urban residents and flexible employees.
Data shows that China's agricultural insurance provides insurance protection for 164 million farming households, and major illness insurance covers a population of 1.2 billion people. The pension reserve accumulated by the insurance industry exceeds 6 trillion yuan, and the long-term health insurance liability reserve exceeds 2 trillion yuan.
Li Yunze stated that efforts will be made to accelerate the filling of gaps in the third-pillar market, vigorously develop commercial insurance annuities, and better meet the retirement security and wealth management needs of the people. Actively developing commercial medical insurance, improving the coverage of long-term care insurance, and promoting the deep integration of health insurance and health management. Tailor-made insurance products for new urban residents such as express delivery personnel and online car-hailing drivers.
Zhou Ling told the Caixin reporter that in terms of the richness of inclusive insurance products, insurance companies need to further improve; secondly, they need to deepen the study of the diverse needs of the insured, actively strengthen comprehensive service capabilities, including insurance + medical health services, insurance + risk management services, insurance + financial education, etc., enhance the connection between inclusive insurance and service targets, enhance customers' sense of value and trust; thirdly, they need to establish inclusive insurance products and market promotion channels that are suitable for different target groups; finally, they need to accelerate the cultivation and establishment of inclusive insurance professional talent team.
Promote the improvement of the catastrophic insurance protection system, and guide insurance institutions to give full play to their professional advantages in risk management.
China has a complex and diverse natural environment, with various types of disasters. It is reported that globally, around 40% of losses from major disasters are borne by the insurance industry, while in China, this proportion is only around 10%.
Li Yunze stated that the insurance industry has the potential and capability to play a greater role in improving the national emergency support system. Next, efforts will be made to promote the establishment of a multi-party-participation catastrophic insurance protection system, guide insurance institutions to give full play to their professional advantages in risk management, and do a good job in disaster prevention before the event, disaster reduction during the event, and disaster relief after the event.
Accelerate the development of liability insurance in the field of environmental pollution, food safety and strengthen the loss compensation and accident prevention functions of safety production liability insurance. Solve social problems through market mechanisms and help improve the level of public security governance.
Propose the implementation guidelines for the construction of the Shanghai International Reinsurance Center to support more foreign financial institutions to set up in Shanghai.
Li Yunze stated that he will work with the Shanghai Municipal People's Government to develop a plan for the accelerated construction of the Shanghai International Reinsurance Center.
Actively explore the pilot investment of insurance funds in Shanghai Gold Exchange gold contracts and related products, relax restrictions on non-resident mergers and acquisitions loans in the Lingang New Area, encourage China Insurance Investment Corporation to better perform the long-term investment function of insurance funds in Shanghai, and support more foreign financial institutions to set up in Shanghai.
In the future, more financial opening measures will be promoted in Shanghai, the construction of the Shanghai International Financial Center and the integrated development of the Yangtze River Delta will be fully supported, and Shanghai's leading role in promoting China's modernization in the Chinese way and demonstrating and leading the modernization drive will be fully exerted.
Zhu Shaojie pointed out that although there are already 15 domestic insurance company reinsurance operation centers and 3 reinsurance brokers settling in the Shanghai International Reinsurance Trading Center, no overseas insurance institutions have settled in the form of "trading seats".
In Zhu Shaojie's view, the trading entities attracted by the Shanghai International Reinsurance Trading Center are not yet sufficient, resulting in low trading volume. Although the large business volume of China's insurance market can provide a solid foundation for the reinsurance market, whether the market elements and trading mechanisms are complete is the prerequisite for the development of the reinsurance trading center. Attracting domestic and foreign market entities (including insurance companies, reinsurance companies, and insurance intermediaries, etc.) to settle in the reinsurance trading center is the key move to establish a complete market.
"Only by gathering enough market entities can insurance risks, insurance funds and other market elements follow and gather in Shanghai, and a highly active reinsurance trading can be formed." Zhu Shaojie said.
Zhu Shaojie suggested that the construction of the Shanghai International Reinsurance Trading Center should seize the opportunity of the digital transformation of the insurance industry, establish a competitive advantage in digital reinsurance trading, and continuously improve the transaction support functions of the reinsurance registration and clearing platform, making Shanghai a demonstrative highland for leading the global digital and intelligent transformation of the insurance industry.