China’s CNinsure Inc. announced that its commissions and fee revenues from its P&C insurance business is “expected to decline slightly due to the implementation of a new Working Scheme on Further Regulating the P&C Insurance Market,” issued by the China Insurance Regulatory Commission (CIRC).
But, the independent broker added, it “anticipates its profit targets for the third quarter and fourth quarter of 2008 and for 2009 won’t be affected.”
CNinsure explained: “The Working Scheme was issued by CIRC on August 29th, 2008 for the purpose of tightening regulation on the P&C insurance market, enhancing risk control, protecting consumers’ rights and interests and forging a fair, regulated and orderly market. The scheme came into effect on September 1st, 2008.”
Chairman and CEO Yinan Hu observed: “The tightening of regulation on the P&C insurance market is helpful for the further consolidation of the fragmented market, which provides substantial opportunities for leading players like CNinsure to continuously expand its market presence through acquisitions.
“As a result of this new working scheme, we anticipate that commissions as a percentage of premiums paid by P&C insurance companies to intermediaries will decrease. This may result in a decline in our commissions and fees revenues from P&C insurance business. However, since we will also pay less to our agents, we believe the overall impact of this new regulation on the gross margin of our P&C business will be limited.”
He added: “On the other hand, we achieved rapid growth in life insurance and claim adjusting business in the first half of 2008, which surpassed our estimate. Therefore, we believe that we won’t be affected by this new scheme in achieving our estimated profit targets for the third and fourth quarter of 2008 and 2009.”
Source: CNinsure Inc. – http://www.cninsure.net
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