By: Dr. Ahmad “Jordan” Al-Zu’Bi

Jordan Daily - “Is the future insurable?” Carolyn Kousky, one of the leading scholars of climate risk and disaster insurance, recently returned to this increasingly important question with Spencer Glendon and Barney Schauble. The concern is well founded. Climate change is altering loss distributions, extreme events are challenging traditional assumptions of diversification, and technological change is creating risks for which yesterday’s data may tell us little about tomorrow. But after living and working across several continents, and now spending considerable time in China, I have come to a different question: What makes a future insurable in the first place? That distinction matters because insurability is not simply discovered by actuaries or supplied by insurance companies. It is partly created by societies.

Insurance Begins Before the Insurance Policy

Insurance does not make a poorly managed risk insurable simply by putting a price on it. Societies create insurability by reducing the frequency and severity of losses, producing better information about risk, building resilient infrastructure, and developing institutions capable of managing uncertainty. Only then does insurance transfer what remains. Think of this as three layers: risk reduction, risk intelligence and risk transfer. Engineering reduces risk. Data and technology make risk more observable. Insurance prices and transfers the residual risk. This changes how we should think about the insurance frontier. The most important insurance investment may sometimes be the one made before the insurance policy is written. The frontier of insurance is not simply transferring more risk. It is changing the risk that eventually reaches the insurer.

China Is Not Simply Insuring Risk. It Is Producing Insurability

This is what makes China particularly interesting to an insurance economist. China is already the world’s second-largest insurance market, but market size is only part of the story. Its high-speed rail network now exceeds 50,000 kilometers. Renewable energy represents more than 60 percent of installed power-generation capacity. Digital infrastructure, artificial intelligence, advanced manufacturing and increasingly connected physical systems are developing at enormous scale. These are usually described as technological or economic achievements. They are also risk-management infrastructure. Infrastructure changes loss distributions. Sensors change observability. Data reduce information gaps. Artificial intelligence changes prediction. Prevention changes expected losses. Capital determines how much residual risk can be absorbed. China is therefore interesting not simply because it is building the future. It is building many of the systems through which future risks will be generated, measured, reduced and insured.

Scale Gives Data. Variation Gives Knowledge.

China has another advantage that is less frequently discussed: extraordinary variation. Its roughly 1.4 billion people live across regions with very different climates, catastrophe exposures, industries, income levels, demographics, infrastructure and levels of technological adoption. China has even completed its first national comprehensive natural-disaster risk census, covering multiple categories of disasters together with population, buildings, infrastructure and economic activity. For insurers, scale creates observations. For economists, variation creates something more valuable: opportunities to understand why risk changes. Scale gives data; variation gives knowledge. This makes China something close to a living laboratory of risk, where emerging technologies, changing exposures and different institutional responses can be observed within one enormous economic system. Few countries combine this degree of scale and variation.

Risk Is Mathematical. Risk Perception Is Cultural.

There is another form of variation that actuarial models sometimes overlook. Risk has probabilities, but people have beliefs about those probabilities. Insurance markets operate on both. China provides fascinating examples. Lucky and unlucky numbers, zodiac beliefs, red envelopes and protective practices continue to influence behavior alongside one of the world’s most technologically advanced economies. Economic research has shown that some of these beliefs can affect prices, financial decisions and risk-taking. These are not merely cultural curiosities. They remind us that insurance demand begins with how people perceive uncertainty. Actuaries model risk. People insure what they fear. Understanding the future of insurance therefore requires understanding not only changing hazards and technologies, but also the cultural architecture through which people interpret risk.

What Can a 5,000-Year Civilization Teach Us About Risk?

China’s history adds another dimension. Across centuries, Chinese society has confronted floods, droughts, epidemics, conflict, demographic change and profound economic transformations. History alone does not make a society a better risk manager, but repeated exposure to uncertainty creates institutional memory and mechanisms of adaptation. Civilizations, like insurers, survive partly by remembering losses. The family is one example. Long before insurance became a contract, it was a relationship. Families pooled mortality risk, illness, income shocks, caregiving responsibilities and longevity risk long before modern insurers existed. China today brings these older systems of resilience into contact with actuarial science, insurance capital, artificial intelligence and financial technology. That interaction between old institutions and new technologies may become increasingly important as China confronts ageing, healthcare financing and longevity risk.

Yesterday’s Models Cannot Insure Tomorrow

The future also presents a harder actuarial problem. Climate change, artificial intelligence, cyber risk, autonomous vehicles, ageing populations and new energy technologies do not simply create additional risks. They can change the underlying loss distributions themselves. Yesterday’s actuarial problem was estimating a distribution from historical losses. Tomorrow’s problem is knowing when that distribution has changed. This is why the future of insurance will belong not merely to countries with the most data, but to those capable of learning quickly when historical data stop describing emerging risks. China is encountering many of these transformations simultaneously and at scale. Its challenge is substantial, but so is the opportunity: to become not simply one of the world’s largest insurance markets, but one of its most important laboratories for understanding the changing frontier of insurability.

Building the Future Means Insuring It

This perspective also gives new meaning to His Majesty King Abdullah II’s recent state visit to China. Cooperation in infrastructure, artificial intelligence, the digital economy, green energy and investment is also cooperation in risk. Every new technology and infrastructure project creates opportunities, but also new exposures that must be understood, reduced, priced and financed. The next generation of international cooperation should therefore involve not only the movement of capital and technology, but also the movement of risk knowledge. China and Jordan have an opportunity to make insurance, regulation and risk management part of that conversation.

The countries that define the future of insurance may not simply be those that sell the most insurance. They may be those that become best at producing insurability.

China is already building much of tomorrow. The more important question is whether it can also help the world understand how to insure tomorrow.

The future is insurable. But first, we have to build an insurable future. China is showing us how.