Conclusion: looking backwards and forwards

Guoqiang Li

Insurance plays a critical role in global economic and social development. The contributions and benefits provided by insurance to society include: supporting innovation and economic development; promoting social stability and improving quality of life; complementing governments’ safety nets and welfare systems; and encouraging and enabling risk management best practices. A vibrant insurance industry composed of profitable and financially strong insurance enterprises is undoubtedly an indispensable ingredient of a vibrant economy and a prosperous society.

Insurance companies are in the business of accepting risks from policyholders and managing risks on behalf of various stakeholders. While diversification benefits and the “law of large numbers” are the keystones of the insurance industry, they do not themselves necessarily eliminate risk for insurance companies. In fact, through insurance, the risks faced by wider society, organisations, corporations and individuals are transferred to, and concentrated in, a small number of insurance companies. The ability to proactively manage and adequately price risk is thus an insurance company’s key competitive advantage. To some extent