Report highlights EU-China relationship in insurance sector

The EU and China have consistently strengthened their relationship across the financial services sector since the 2008-2009 financial crisis, despite an increasingly challenging diplomatic backdrop between these two economic superpowers, according to a joint study conducted by Luxembourg for Finance and PwC Luxembourg. As far as insurance is concerned, the report, Beyond the challenges: the strength of Sino-European ties, notes that increased deregulation and liberalisation are opening a wealth of cooperative opportunity through China’s vast insurance industry. It explains that China’s share of global premiums could surpass the US by 2029, totalling about €5.5trn by 2030. “A strong and mutually beneficial Sino-European relationship is evident in the insurance space. European insurance companies have traditionally partnered up with a variety of Chinese firms, ranging from retailers to food companies, in order to capitalise on the buoyant Chinese insurance market,” the report states. But it adds that European insurers’ exposure to the Chinese market has been historically limited by a raft of regulations and entry requirements – including having a 30-year-old track record in their respective domestic markets and a minimum of $200mn in assets – and Chinese insurers were limited in their abilities to provide their services overseas. However, the report highlights a lightening of certain regulatory boundaries, which promises to result in increasing cooperation between China and Europe’s insurance industries, and the removal of the foreign cap and entry barriers for foreign insurance companies, which has catalysed a surge of European players entering the Chinese market. Chinese insurers have also expanded into the European market, after the China Banking and Insurance Regulatory Commission permitted local insurers to make investments in 25 developed markets and 20 emerging markets in 2014. “While the Chinese market is undoubtedly flourishing, the entrance of foreign players into mainland China promises to overcome the coverage and accessibility challenge facing the current insurance landscape. In addition, local players could benefit from the expertise of foreign insurers in varied markets,” the report states. Nicolas Mackel, CEO of Luxembourg for Finance, commented: “The world must build back better after the pandemic, and the relationship already established between China and the EU in financial services will be a key factor. While the political overtones are sometimes challenging, there is a need to be pragmatic and to find a productive way forward. Right now, the need for global cooperation and free-flowing capital have never been more critical to tackle the climate emergency.” Dariush Yazdani, market research centre leader, asset and wealth management at PwC Luxembourg, said: “The data highlighted by the research showcases the evolution of financial integration between China and the EU and emphasises the need for continued cross-border collaboration. The recent regulatory developments in China and the strong interest shown by global players in accessing the Chinese market and vice versa strongly suggests that the financial sector represents a veritable opportunity to foster a lucrative, long-lasting financial relationship.”

Report highlights EU-China relationship in insurance sector

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