Lloyd's, the world's oldest insurance market, plans to expand its reinsurance business on the mainland to help domestic insurers cover claims arising from natural catastrophes like the blizzards that hit earlier this year.
The worst snowstorms in 50 years that struck in February have already spawned claims totalling 4.29 billion yuan (HK$4.79 billion), with mainland insurers such as PICC Property and Casualty facing big payouts.
Lloyd's chairman Lord Peter Levene said in an interview that reinsurance on the mainland was still a new concept, with few domestic companies taking up the arrangement.
In more mature markets such as the United States and Europe, most insurers spread their risks by arranging with a reinsurance company to pay part of claims made against it by policyholders.
'Reinsurance companies can help provide stability to the insurance sector and play an important role when catastrophes like snowstorms, floods or earthquakes hit China,' Lord Levene said.
Lloyd's is an expert in natural catastrophe reinsurance cover. In the hurricane season in the United States last year, it paid US$8 billion to cover claims for damages caused to buildings and other properties, he said.
China Reinsurance (Group) is the mainland's leading reinsurer, but the regulator in recent years started to grant licences to overseas players including Munich Re and Swiss Re. Last year, it gave Lloyd's permission to set up a wholly owned company in Shanghai to offer reinsurance nationwide.
