China is expected to become the world's second-largest market for reinsurance in the coming decade, encouraging global reinsurers like SCOR to ramp up investment in the country, the French group's top executive said.
Thierry Leger, CEO of SCOR, which is based in Paris, said the Chinese market offers "incredible growth potential" and is also expected to become SCOR's second-largest market.
Reinsurance is essentially a type of insurance business whereby a reinsurer offers coverage to other insurance companies, allowing them to transfer a portion of their insured risks to it.
Leger told China Daily in an exclusive interview that the sector's growth prospects would be underpinned by China's robust economic growth potential in the next 10 to 20 years, as well as by the current large gap in insurance protection, which will increase the demand for insurance and reinsurance.
In addition, China's aging population will boost the demand for life insurance and health insurance products, while the continued growth of China's industrial sector will require more property coverage, and climate change will fuel demand for coverage related to natural disasters, Leger said.
China's contribution to SCOR's overall business is expected to increase to at least 10 to 15 percent in the coming 10 to 20 years, with income from insurance premiums in China set to double or even triple, he said.
This forecast also applies to the overall size of China's reinsurance sector. "I'm convinced that the Chinese reinsurance market will become No 2 in the world in the next 10 years," said Leger.
"So that shows the importance of the Chinese market and the need for us to continue to invest in our people, in our expertise, in our tools and in our data in the Chinese market."
Leger said that under SCOR's Forward 2026 strategic plan, the company will invest a lot in the modeling and underwriting of cyberspace risks to meet the booming demand in China. It also will "massively" boost investments in China's capital market — which now stands at about $1 billion — to leverage the country's long-term growth prospects, he said.
Leger said he "disagrees strongly" with arguments that China's economic development has peaked, given that much potential remains, for example in reducing the gap between Chinese consumers and their peers in the United States and Europe in terms of per capita spending, and in deepening digital transformation as a key growth engine.
As China's industrial sector evolves while technology advances, Leger said he sees a growing potential for technological exchanges between Chinese and French companies. He added that it is of particular importance for the two countries to confirm their strong ties amid the headwinds of intensified global geopolitical tensions.
President Xi Jinping arrived in Paris on Sunday for a state visit to France at the invitation of French President Emmanuel Macron, a trip that coincides with the 60th anniversary of the establishment of diplomatic relations between China and France.
Leger said that "in a world full of geopolitical tensions and wars, it's very important to send signals that show people that there are long-term relationships and that there is a long-term view of peace and collaboration between (the two) countries".
He added that China has promoted financial opening-up step by step, which has helped shape a high level of confidence, and it is important for the country to continue to build a stable regulatory environment for foreign investors.
