A new report by international reinsurance broker and risk intermediary Benfield, entitled “China Insurance Market Review: Major changes, rapid growth,” examines the changes that have taken place in in the recent past in the country and what may happen in the future.
Benfield notes: “Premium income growth in China has exceeded expectations in recent years but the insurance market is still in its infancy.” Total premiums rose from $26 billion to $61 billion between 2001 and 2005, with a growth rate of 25 per cent per year. Life premiums led this trend with a 27 per cent per annum uplift over the period and represented 74 per cent of the total insurance market by 2005. Non-life premiums grew at over 18 per cent per year over the period principally reflecting rising motor vehicle sales.
“Rapid economic development, spurred by reforms, has been the driver for growth for the country at large and the insurance industry in particular,” noted Angelo Unson from Benfield’s Industry Analysis and Research team. “Domestic players still dominate but foreign capital and expertise is increasingly playing a supportive role with the removal of geographical and product restrictions.”
Benfield also indicated that “since entering the WTO in 2001, the number of insurers in China has increased from 31 to 83 in 2005, reflecting the lifting of restrictions on new participants entering the market. The state controlled PICC and China Life still dominate the Chinese non-life and life markets with 52 per cent and 44 per cent market share respectively, but their position is decreasing.”
According to the report, “awareness of insurance still remains low amongst much of the population. Huge regional disparities do exist reflecting the relative wealth of the major cities compared with the rural areas.” The “penetration rate, at 2.7 per cent, is low” with per capita spending of around $46, compared to a developed market such as Japan, where it’s estimated at $3,747. There’s a lot of room for further growth.
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