China's net-zero transition presents new business opportunities for insurers
Insurance companies will usher in new opportunities as China is committed to hitting peak emissions before 2030 and carbon neutrality by 2060, according to global management consulting firm McKinsey & Company.
From 2020 to 2030, four core sectors – green transportation, green energy, green buildings as well as green agriculture, forestry and animal husbandry – will generate a cumulative premium of about 2.7 trillion yuan (US$390 billion yuan), McKinsey estimated in its recent report.
Among this, green transportation will be the core growth engine and is projected to contribute about 2 trillion yuan of cumulative premium.
To capture these business opportunities, the consultancy advised underwriters to tap into the explosive growth of emerging industries and new technologies, such as new-energy vehicles and hydrogen storage, and develop high-value service portfolios.
For products, insurance companies can focus on new risks in specific links across the industry chain and design differentiated insurance solutions and pricing strategies.
Also, insurance firms should seek to provide more value-added services for policyholders and charge corresponding service fees in addition to their traditional underwriting business, the report noted.
"Sustainable transformation will be a strategic priority for leading insurers in the next decade," said Bernhard Kotanko, senior partner of McKinsey & Company.
Chinese insurance institutions should put this issue onto their CEO agenda and curate a systematic transformation framework and path to help the country's transition to a net-zero economy, he added.
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