Aon Re China Limited, a unit of Aon Corp., has secured 100 percent placement of the first agricultural reinsurance contract in China.
The contract was awarded by the Shanghai Anxin Agricultural Insurance Co. Ltd. (AAIC), the first specialized agricultural insurance company in the country approved by the China Insurance Regulatory Commission (CIRC) to serve the agriculture and farming industries.
The historic deal opens up a new era in the nation’s insurance industry for cooperation between local agricultural insurers and global reinsurance providers.
Under the agreement, Aon Re China, supported by its global network
spanning more than 40 countries around the world, will provide AAIC with advisory services such as catastrophe information forecasting and financial analysis to protect its crop insurance portfolio. Reinsurance arrangements will also reportedly maximize the economic benefit of its risk transfer program.
“Aon Re China is delighted to be working with AAIC. We believe this contract signals the start of an exciting period of growth and development for the agricultural reinsurance industry in the country,” said Henry W C To, managing director of Aon Re China. “We are confident that agricultural insurance will be a major focus in China’s insurance market in the next five years and we have already generated sufficient interest in agricultural reinsurance.”
The founding of AAIC in September 2004 is reportedly regarded as an important milestone in the development of China’s burgeoning insurance industry. Given the full backing of the CIRC, the company was established to revive the agricultural insurance business and better protect the agriculture and farming sector from risks.
With a registered capital of RMB 200 million, AAIC was launched as a pilot model that is both subsidized and promoted by the Chinese Government but operated as a private commercial entity.
Besides crop and livestock insurance from which it derives at least 60 percent of its business, the company sells agro-related property insurance and liability insurance, as well as short-term life accident insurance and health insurance for rural residents.
Even though the rural population of nearly 900 million underlines great market potential, very few insurance companies have set foot in the agricultural business.
“The agricultural insurance and reinsurance industry in China is still
relatively under developed but the market potential is vast. This important contract with AAIC has certainly given Aon Re China first mover advantage in the mainland and helped to further strengthen our position as the leading reinsurance broker in China,” commented To.
Aon’s current global reinsurance projects include crop schemes for Consorcio in Spain; Mauritian Sugar Fund; Kiwi fruit production in New Zealand; course, cotton, broad acre and horticulture in Australia; and an agriculture insurance pool in Chile.