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China aiming to be number two in insurance industry
Publication Date : 22-08-2014
China's insurance market is the fourth largest in the world.
Last year, its insurance industry experienced encouraging growth with an annual premium of 1.7 trillion yuan (US$277.17 billion), an increase of 11 per cent from the previous year.
China Insurance Regulatory Commission vice chairman Wang Zuji said China stood a chance to become the second largest insurance market in the world around 2023, according to forecasts of internationally renowned financial institutions.
“Currently, our crop insurance and vehicle insurance are the world’s second largest,” he said in a press conference.
Last week, the State Council of China issued a new policy guidance to accelerate the development of modern insurance services in the country.
The policy guidance, the second to be issued in eight years, underlined a goal to increase the insurance penetration to 5 per cent with the average insurance premium of 3,500 yuan ($568.12) per capita by 2020.
From 107 insurance companies in 2006, China now has 178.
National Development and Reform Commission secretary-general Li Pumin said the development of the insurance industry in the country was still lagging behind and had yet to fully serve its role in social and economic development.
“Be it the insurance premium volume to Gross Domestic Product or the premium per capita, we are still far from the world’s average level,” he said, adding that there was a lack of consumer confidence in the insurance industry.
Li said the policy guidance would be a catalyst for the insurance industry to play its positive role in promoting economic growth, introducing innovative social governance and ensuring social stability.
An insurance system for natural disasters is also in the pipeline, with the southern city of Shenzhen and China’s southwestern Yunnan province being the first to carry out the pilot experiment.
In Chuxiong, Yunnan, the annual insurance premium reached 50 million yuan ($8.12 million) while in Shenzhen, the government forked out 36 million yuan ($5.84 million) a year for this risk protection.
“Establishing the system is a very, very difficult project as our land is vast, and the geological hazards and natural disasters affecting the country are complicated,” Wang said.
The catastrophe insurance system proposed a multi-level risk-sharing mechanism among the finance departments of central and local governments, insurance and reinsurance companies and affected individuals.
The government will also look into setting up a calamity insurance fund and reinsurance system.
While he did not pinpoint the timeline for the catastrophe insurance system to be put in place, Wang said the commission would work together with all relevant departments to push for its launch.
Among the planned efforts are developing the earthquake and catastrophe insurance regulations and continuing to promote pilot schemes.
“The encouraging progress of the current pilot schemes is a huge support for the establishment of the catastrophe insurance system,” he said.