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China slowdown will hit insurance industry: Munich Re

China’s growth slump is no cause for panic but it is a concern, and the insurance industry will not escape unscathed, Munich Re Chief Economist Michael Menhart says.

Dr Menhart says in a report that a dramatic collapse is a long way off, but the world is becoming more sensitised to risks in China, and the insurance industry is no different.

“Direct involvement of European insurers in China is still relatively low, but it is already the fourth-largest insurance market in the world,” he said. “Rising prosperity and increasing demand for insurance are still important growth drivers.

“We expect more than 20% of global premium expansion by 2020 to come from China.

“But if there is a hard landing, we will have to reduce these forecasts significantly.”

Dr Menhart says the greater the concerns about China, the less likely Western central banks are to normalise monetary policies, “much to the disappointment of insurers”.