At a press conference sponsored by the State Council Information Office on February 13, Wu Dingfu, chairman of the China Insurance Regulatory Commission (CIRC), briefed the press on the reform, opening up and development of China's insurance industry.
According to Wu, since the resumption of its domestic business, China's insurance sector has rapidly developed. The average annual growth rate of the premium revenue is 34 percent. The national premium income for 2003 reached 388.04 billion yuan, an increase of 27.1 percent over the previous year. The total assets of the insurance industry reached 912.28 billion yuan, up 41.5 percent over the previous year.
By the end of 2003, China had 61 insurance companies including 24 domestic companies and 37 foreign invested companies. According to their line of business, there were 24 non-life insurance companies, 32 life insurers, and 5 reinsurance companies. Among the 705 professional insurance intermediaries that had been licensed to do business, there were 507 professional insurance agencies, 115 insurance brokerages, and 83 loss adjusters. The total number of employees in the industry exceeded 1.5 million.
The promulgation of the Insurance Law in 1995 marked that China's insurance industry had entered a stage of legal administration, Wu said. To meet the requirements of WTO membership, the State Council promulgated the Administrative Rules of Foreign Invested Insurance Companies. The Insurance Law was revised in 2002 with a view to facilitating the fast growth of the industry and China's WTO commitments. Meanwhile, CIRC worked out 28 regulatory documents.
Established in 1998, CIRC is the regulatory body of China's commercial insurance industry. It has set up 31 local branches across the country. Another four branches will soon be established in Dalian, Qingdao, Ningbo and Xiamen.
CIRC stresses legal compliance in exercising its regulatory responsibilities, and instead of minding too many details of business administration, CIRC is letting the market mechanism fully function in promoting the sound development of the industry, Wu noted.
In addition, to improve its regulatory effectiveness, CIRC has toughened up in punishing illegal insurance activities. In last year alone, CIRC unearthed 466 cases of illegal insurance activities, and imposed penalties on 37 people that were held to be accountable for those cases.
Talking about the future development of the industry, Wu said that China's insurance industry is still in its early stage of development, faced with quite a few challenges and problems. Firstly, the industry is yet to become big enough to fully facilitate the national economic and social development. In 2003, China's insurance penetration, i.e. premium income over the GDP, and insurance density, i.e. premium income per capita, were 3.33 percent and US$34.7, respectively. The corresponding global averages in 2002 were 8.14 percent and US$422.9.
In addition, the insurance industry is yet to fully play its roles in the economic and social development. The simple products and poor service cannot live up to the increasing demand of the general public for insurance. Furthermore, as illegal activities such as defrauding policyholders still exist, insurers still need to build their integrity and credibility. Finally, certain insurance regulatory methods do not well facilitate the fast growth of the industry.
CIRC is going to make efforts to effectively tackle all these problems and issues, the CIRC chairman vowed to the public.
Concerning the opening up of the sector, Wu said the geographical restrictions on foreign insurers will be removed gradually. At present, the areas where foreign companies are allowed to operate has been expanded from Shanghai to 15 other cities such as Guangzhou, Beijing and Wuhan. A total of 128 foreign insurance institutions from 19 countries have established 192 representative offices in China. Premium income earned by foreign-funded insurers has been gaining an increasing share in the total premium income of the whole industry.
In future, foreign insurers will be allowed to sell health, group life, and pension products to both foreign and Chinese citizens. They are welcomed to launch insurance business in western China and the northeastern areas where the old industrial bases were located.
(China.org.cn February 13, 2004)
