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Sino-British insurer AVIVA-COFCO Life Insurance Co Ltd launched an inroad into the competitive Beijing market yesterday, announcing a tie-up with a leading local agency that it hopes will help achieve rapid market penetration.
The insurer said it plans to open one or two new Chinese branches next year, following the expected establishment of its third local branch in Chengdu, southwest China's Sichuan Province, next month.
The company, a 50-50 joint venture between British insurance giant Aviva Plc and China National Cereals, Oils & Foodstuffs Import & Export Corp (COFCO), was set up in January last year in Guangzhou, south China's Guangdong Province. It started selling policies in Beijing on Monday, although its official commencement is not scheduled until next month, company executives said.
"Some 1,000 policies were written yesterday, which was quite encouraging," said Rex Tung, general manager of AVIVA-COFCO's Beijing Branch.
Although the company came to the Chinese capital somewhat late relative to many other foreign insurers, Eric Chang, president of AVIVA-COFCO, said he believed growth prospects remain attractive.
"The opportunities here are just tremendous," he said. "Although there are more players now, the market is still not all that competitive."
"Many local residents still have to learn about insurance products," he said.
Many foreign insurance firms see the Chinese capital as their first choice when opening new branches because of its huge potential, analysts say. The city's life insurance premiums totaled 22 billion yuan (US$2.7 billion) last year, accounting for 3.6 percent of bank savings by local residents, compared to the European Union's 20 percent ratio of life insurance premiums to household financial assets.
And AVIVA-COFCO is hoping its cooperation with Beijing Jiaxin Insurance Agency Co Ltd, a leading local insurance agency, will help facilitate its market penetration by sparing it the building of its own sales forces.
"We believe independent agencies have their contributions to make," said Tung, adding the company's first 1,000 policies in Beijing were sold by the agency.
Co-operation with insurance agencies will also help the company concentrate on product development and services, Tung said.
AVIVA-COFCO and Jiaxin signed a cooperative agreement yesterday, making the insurance company the first life insurer in the Beijing market to choose agencies, rather than individual agents, as its primary distribution channels.
(China Daily August 11, 2004)
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