China’s State Council Bolsters Reinsurance Industry with New Policy to Drive Internationalization

BEIJING – July 3, 2025 – The State Council of China has unveiled a significant policy to support the development of the reinsurance industry and accelerate its internationalization, as outlined in the Notice on Replicating and Promoting Pilot Measures for Comprehensive Alignment with International High-Standard Economic and Trade Rules in Free Trade Zones.

This policy, initially piloted in the China (Shanghai) Free Trade Zone (FTZ), aims to replicate successful institutional innovations nationwide, fostering high-level openness, deeper reforms, and high-quality economic growth. By prioritizing the reinsurance sector, the State Council seeks to enhance risk management capabilities, attract global capital, and strengthen China’s position in the international insurance market.

China’s State Council Bolsters Reinsurance Industry

Policy Details and Objectives

The new policy emphasizes supporting the reinsurance industry’s development and advancing its internationalization through several strategic measures:

• Regulatory Alignment: Streamline regulations to align with international standards, facilitating foreign reinsurers’ entry into China and encouraging domestic reinsurers to expand globally. This includes simplifying approval processes for reinsurance contracts and cross-border transactions.

• Capital Incentives: Offer tax incentives and capital relief for reinsurance operations in FTZs, particularly in Shanghai, to attract international players and bolster domestic firms’ financial resilience.

• Innovation Hubs: Establish reinsurance innovation centers in FTZs to develop new products, such as catastrophe bonds and cyber risk reinsurance, leveraging technologies like blockchain and AI for risk assessment and pricing.

• International Collaboration: Promote partnerships between Chinese reinsurers and global giants like Munich Re and Swiss Re, fostering knowledge transfer and co-underwriting of large-scale risks, such as those along the Belt and Road Initiative.

• Market Access: Enhance market access for foreign reinsurers in China’s $540.8 billion life insurance market (2021 data) while supporting Chinese reinsurers’ expansion into Asia, Europe, and Africa through reciprocal agreements.

The policy builds on Shanghai FTZ’s success, where reinsurance premiums grew by 15% annually from 2020 to 2024, driven by pilot programs for cross-border reinsurance and digital platforms. By replicating these measures, the State Council aims to position China as a global reinsurance hub, rivaling markets like London and Singapore.

Current Status of China Reinsurance Industry

China’s reinsurance market has shown robust growth, fueled by rising insurance demand, economic expansion, and government support. In 2023, the market was valued at CNY 678.8 billion ($95.5 billion), accounting for a significant share of the global reinsurance market, which reached $264.26 billion in 2024. The market is projected to grow at a CAGR of 3.25% through 2028, driven by increasing demand for life, health, and property reinsurance amid urbanization and climate risks.

Key players include China Reinsurance (Group) Corporation (China Re), Munich Re, Swiss Re, and domestic firms like China Life Reinsurance and PICC Reinsurance.

China Re, a state-backed leader, reported a 22% VNB growth to $991 million in 2024, reflecting its dominance. The market benefits from government initiatives, such as the “One Belt, One Road” Reinsurance Community, which provided CNY 741 billion in risk coverage for overseas assets in 2024, up 98% year-on-year.

Recent developments highlight the market’s evolution:

• Digital Transformation: Reinsurers are adopting AI, big data, and blockchain to enhance risk modeling and claims processing, with China Re’s digital platform handling 30% of its portfolio in 2024.

• Diversification: Firms are expanding into health and cyber reinsurance, with China Nuclear Insurance Community setting industry standards for nuclear risk coverage.

• Internationalization: Chinese reinsurers are increasing their global footprint, with China Re underwriting risks in 13 countries for nuclear and renewable energy projects.

• Regulatory Support: The National Financial Regulatory Administration (NFRA) has relaxed foreign ownership caps, attracting reinsurers like Hannover Re and SCOR SE.

However, challenges persist, including exposure to catastrophe risks (e.g., floods, typhoons), which led to a 6-8% average ROE for global reinsurers from 2022-2024, and a shrinking pool of alternative capital due to frequent disasters.

Comparison with Previous Reinsurance Deals

Resolution Life’s $1 billion Hong Kong reinsurance deal (June 2025) provides a benchmark for understanding China’s reinsurance market dynamics. Below, we compare it with other significant deals in Asia from 2024-2025, focusing on scale, structure, and strategic impact:

Transaction	Resolution Life Hong Kong (2025)	China Re “Belt and Road” (2024)	RGA Japan (2024)	Swiss Re China (2023)
Value	$1B	CNY 741B ($104B, cumulative)	$6.4B	$0.8B
Cedant	Unnamed HK insurer	Multiple (Belt and Road projects)	Japan Post Insurance	China Life
Portfolio Type	Participating whole life, annuities	Infrastructure, green project risks	Individual annuities	Life, health reinsurance
Risks Transferred	Market, policyholder behavior, mortality	Political, construction, operational	Market, longevity	Mortality, morbidity
Region	Hong Kong	Global (Belt and Road countries)	Japan	China
Strategic Goal	Market entry, capital optimization	Support national infrastructure	Capital efficiency	Expand life reinsurance
Advisors	Linklaters, Eversheds, Walkers	Not disclosed	Not disclosed	Clifford Chance
Innovation	Comprehensive risk transfer	Green project coverage (wind farms)	Longevity risk focus	Digital underwriting

Analysis

• Scale: China Re’s Belt and Road deal dwarfs others in cumulative value ($104 billion), reflecting its role in national priorities. Resolution Life’s $1 billion deal is modest but significant for Hong Kong’s market entry. RGA’s $6.4 billion Japan deal targets a mature market, while Swiss Re’s $0.8 billion deal focuses on China’s life sector.

• Portfolio Focus: Resolution Life’s deal mirrors Swiss Re’s focus on life and annuities but contrasts with China Re’s infrastructure-heavy portfolio. RGA’s annuity-centric deal addresses Japan’s aging population, unlike China’s broader risk coverage.

• Strategic Impact: Resolution Life and Swiss Re aim for market penetration, while China Re supports geopolitical goals. RGA’s deal optimizes capital for a single cedant, unlike the multi-cedant Belt and Road initiative.

• Innovation: China Re’s green project coverage (e.g., maritime wind farms) aligns with the State Council’s push for innovative products, while Resolution Life’s comprehensive risk transfer sets a precedent for Hong Kong.

Implications and Outlook

The State Council’s policy is a game-changer for China’s reinsurance industry, aligning with the 2024 Shanghai International Reinsurance Conference’s theme of “Global Cooperation, Open Win-Win.” By fostering internationalization, China aims to increase its global reinsurance market share, projected to grow from $95.5 billion in 2023 to $214.44 billion by 2030 (CAGR 1.7%). However, reinsurers must address challenges like climate-driven losses (e.g., 2024’s record typhoon claims) and geopolitical risks impacting Belt and Road projects.

The policy’s focus on FTZs, particularly Shanghai, positions China to attract global reinsurers while empowering domestic players like China Re to lead in Asia. As the China Nuclear Insurance Community and One Belt, One Road Reinsurance Community demonstrate, China’s reinsurers are already setting global standards. With continued regulatory support and technological innovation, China’s reinsurance market is poised to become a cornerstone of the global insurance ecosystem.

Consult Everbright Actuarial Consulting for Expert Guidance

To navigate the opportunities presented by China’s reinsurance policy or gain insights into the evolving reinsurance market, contact Everbright Actuarial Consulting. Our team of actuaries and brokers offers tailored risk assessments, market analysis, and strategic solutions to help insurers, reinsurers, and investors capitalize on China’s growing reinsurance sector. Reach out for consultations, educational resources, or customized portfolio strategies.

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