BEIJING -- After five years of the proposal of the Belt and Road Initiative, China's insurance industry has given full play to its roles in risk warning and management and support enterprises’ overseas development.
According to some experts, while leveraging the leading role of policy-based insurance, efforts should also be made to guide the commercial insurance, constituting an all-round system to lower risks for enterprises in their overseas businesses.
--Supporting role of insurance industry
The Belt and Road Initiative has brought numerous opportunities for China's insurance industry. The market demand for conventional insurance has been on the rise, such as the insurance for overseas construction, overseas investment, overseas leasing, buyer's default, cargo and loan guarantee for small and medium enterprises.
It’s learned that the medium- and long-term export credit insurance and overseas investment insurance of China Export & Credit Insurance Corporation have respectively covered 67 and 369 projects in the countries and regions along the Belt and Road route, involving items valued at 55.13 billion U.S. dollars. The export credit insurance has been utilized to secure financing by banks to promote the overseas business of the engineering machinery, communication equipment, and other competitive industries of China.
By securing foothold in Singapore, Indonesia, Hong Kong and other countries and regions along the Belt and Road route, the overseas subsidiaries of China Taiping Insurance Group have provided a wide range of insurance products for Chinese enterprises in their trade and businesses, such as the insurance for cargo, vessels, vehicles, offices, properties and accidents. They also provide a variety of insurance products for the life and property of local people in the countries and regions along the Belt and Road.
China Taiping Insurance Indonesia has provided insurance for the engineering, property, loss of profits, liability for environmental pollution and cargo transportation in the Indonesia Morowali Industrial Park, involving items valued at 3 billion dollars. It also provides the industry park with training programs on insurance policy, risk survey and risk management each year.
--Improving risk-resistant capabilities of enterprises
As shown in the Report on Risk Review and Prediction for Worldwide Countries (2018) released by China Bond Rating Co., Ltd., some countries are facing more severe social tensions and intensifying geopolitical conditions, and due to a series of factors, countries are seeing higher risk level than in 2016.
Bai Ming, a senior analyst at the Chinese Academy of International Trade and Economic Cooperation of China’s Ministry of Commerce, said that China's insurers need to weigh insurance and risks, and cannot simply undertake the risks from insured enterprises.
Insured enterprises and insurers should first consider how to avoid risks rather than expand their businesses. Insurance does not eliminate risks and enterprises should make more efforts to avoid risks, so that insurers can provide suitable services. Certainly, there are no risk-free projects, but the risks must be appropriately balanced with the expected returns, Bai believed.
-- Further enhancing insurance service system
With more and larger enterprises engaged in the Belt and Road Initiative, the demand for insurance will be more diversified. Based on the risk assessment, insurers should keep pace with enterprises, and provide them with various risk insurance policies. This will provide opportunities for transformation of the insurance industry, Bai noted.
According to an official from China Taiping, the insurers of China should enhance their risk-resistant capabilities to deal with international, large-scale and complex projects. While further adjusting, optimizing and integrating their internal capabilities, they should continue to consolidate resources of home insurance companies, identify key programs, build co-insurance organizations, so as to jointly set up overseas subsidiaries for mutual benefits.
From the perspective of top design, greater efforts should be made to direct the commercial insurance for the Belt and Road projects and promote business coordination between commercial insurers and policy-based insurers. A well-designed insurance coverage and a rational risk dispersion mechanism should established to transfer risks to the international market, the person also noted.
Zhou Yanli, former vice chairman of China Insurance Regulatory Commission, suggested a mechanism for cooperation in the insurance industry should be established to serve the Belt and Road Initiative, and connectivity of insurance supervision should be strengthened, to form a consistent insurance regulatory system and standards. Meanwhile, efforts should be made to ensure sound cooperation among insurers, regulators, financial institutions and relevant business institutions. (Edited by Yang Qi, kateqiyang@xinhua.org)
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