Strong policies support economic resilience

A1 These measures are to help improve domestic consumption and economic growth. We believe these are timely measures to rejuvenate the slowing economy, as retail sales growth slowed to an average of 8.3 percent from January to July this year compared to 9.3 percent for the same period in 2018. Some measures, including the purchase of new energy vehicles and the relaxation of restrictions on car purchases will directly and positively impact motor insurance in China. Other measures that encourage customization of production designs, increasing domestic sales of export-focused goods and services, and expanding cross-border e-commerce imports to more cities will also grow production, logistics and liabilities-related insurance products.

A2 Some sectors of the Chinese economy are performing well, including real estate, services and the digital economy. In particular, China's digital economy is rapidly becoming a main driver of the country's economy. The gross value of the digital economy increased by a strong 21 percent in 2018 from the previous year and accounted for some 35 percent of China's GDP. The e-commerce sector (online retail sales and electronic transactions) in China has grown rapidly to become the largest in the world. Digitalization is also having a strong impact on how insurers create value from devising new and innovative products to settling claims in a more efficient way. Investing in digital capabilities and risk management in a rapidly evolving risk landscape is arguably a priority for all insurers operating in China. Green development is also on top of the Chinese government agenda and that means we are looking at a ramp up in our environmental protection-related business lines. We continue to invest broadly across our business in China, as there are many areas of growth and potential growth. Our full-time head count has grown from 82 in 2013 to more than 170 at present. We expect to grow that to over 210 in the next year or so.

A3 The growth of retail sales and consumption is accompanied by the rise of digital ecosystems. The ability of digital ecosystems to capture consumer data and provide tailor-made services, often based on big-data analytics and the use of advanced algorithms, is rapidly becoming a key competitive advantage for financial services providers. Insurance companies are in turn looking to develop their own ecosystems or partner those with existing ones. For instance, online motor platforms that integrate car sales, financing and after-sales services can be leveraged to offer better consumer experience for motor insurance buyers. At the same time, the rising importance of intangible assets and ever-rising threat of cyber incidences also open up additional business opportunities for insurers. The emergence of consumer purchasing power not only has an impact on economic growth, but also challenges the risk landscape and business model of insurance companies on product design, distribution, and claims, among others.

A4 The Chinese economy has shown extraordinary resilience in the face of major external shocks including the 2008-9 global financial crisis. From a risk management perspective globally, we want to help make countries more resilient. For example, how governments - at the federal or even provincial level - help citizens recover from a major natural disaster. Robust disaster relief efforts and strong government organizational capabilities are key to disaster relief and recovery, but provincial governments will have to shift from post-to pre-disaster risk financing to improve fiscal certainty and better make use of budgets.