The next decade will be a critical period for China's insurance and reinsurance industry to address existing gaps, making the acceleration of reinsurance development a fundamental logic and strategic choice for financial reform and development, officials and senior executives in the insurance industry said.

Zhuang Qianzhi, Party head of China Reinsurance (Group) Corp, said that as the process of Chinese modernization accelerates, high-quality development is propelling China's economy toward a more advanced stage, creating unprecedented and multi-layered risk management demands across society.

In the first half, China's property insurance industry recorded a premium growth rate of 4.2 percent year-on-year, slightly lower than the growth rate during the same period last year. However, under strict regulatory policies, the industry's combined cost ratio continued to improve, significantly enhancing underwriting profitability. Underwriting profits reached 26 billion yuan ($3.7 billion), marking a record high for the same period.

For the first time, over half of the companies achieved underwriting profitability, signaling a trend toward high-quality development within the industry. The property reinsurance market has been experiencing steady growth in recent years, with ceded premiums exceeding 100 billion yuan for the first time in the first half of the year.

Furthermore, with climate change bringing up more challenges, the industry's exposure to catastrophic risks continued to grow. Risk accumulation has evolved into new forms, including industrial clustering and overlapping insured assets. Reinsurance losses remain elevated, prompting most reinsurance companies to maintain strict underwriting discipline.

To meet the growing demands of the market, Zhuang emphasized the need for a more resilient and efficient financial risk management system, which must be firmly supported by a modern and high-level reinsurance system.

Zhuang explained that catastrophes are natural or man-made disasters that cause significant losses to the economy and society, characterized by low frequency, high severity and geographical concentration. The key criterion for identifying catastrophes lies in the scale of losses, and internationally, events with losses exceeding $25 million are typically defined as catastrophic risk events.

He highlighted that reinsurance companies, leveraging their capital, technology and global operations, play a critical role in dispersing and transferring risks, making them one of the primary channels for managing catastrophic risks.

Zhuang made these remarks at the Shanghai International Reinsurance Conference. Under the theme of "Walking in Tandem, Talking to the Globe", the event, held in the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone, gathered numerous reinsurance companies from both domestic and international markets.

Qi Xiang, director-general of the National Financial Regulatory Administration's Shanghai bureau, pointed out that reinsurance institutions are not required to hold local licenses and can underwrite global risks offshore, underscoring their distinctive international operations.

Currently, more than 3,300 global institutions are engaged in China's reinsurance business, with overseas entities accounting for 75 percent, Qi said.

Shi De, director of the corporate business group at Ping An Property and Casualty Insurance, stated, "Looking at the development of China's insurance industry today, we see that globalization and internationalization are irreversible trends."

Shi emphasized that today's reinsurance must not only cater to the "local characteristics" of the Chinese market but also possess the vision and capability to connect globally — by assuming international risks to integrate into the global network and ceding domestic risks to alleviate domestic pressure. Through this two-way interaction, the global resilience of China's insurance industry can be enhanced, Shi said.

In February, the Commission on Comprehensively Deepening Reform of the Shanghai Municipal Committee of the Communist Party of China, identified the construction of the Shanghai International Reinsurance Registration and Trading Center as a key breakthrough and lever for advancing Shanghai's development as an international financial center and enhancing the internationalization of financial markets. This further underscored its importance and clarified its development path, Qi added.

The construction of the center is expected to benchmark against the highest international standards and best practices, focusing on serving the needs of both domestic and international institutions.

Efforts should be made to establish a regulatory and business environment policy system that aligns with these goals, Qi said. This includes differentiated solvency systems, credit evaluation and guarantee mechanisms, the introduction of internationally mature risk transfer products, facilitation of cross-border business income and investment, and streamlined processes for personnel entry and exit to conduct business. Qi stressed that this initiative aims to create a demonstration model for high-level financial sector openness in China.