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Chinese insurance regulators and legislators on Friday urged insurance companies to expand their presence in the nation's counties and vast rural areas to help promote local economic development.
Pledging efforts to secure necessary government support, they said the county-level and rural markets also offer a new growth engine for the nation's fast-growing insurance industry.
The insurance industry has a larger role to play in helping promote the growth of China's rural economy, which the Chinese Government has identified as a top priority, said Wu Dingfu, chairman of the China Insurance Regulatory Commission.
But if insurers fail to fully explore the business potential in the country's more than 3,000 counties, the industry can hardly sustain its rapid growth, he cautioned.
Counties occupy 93 percent of Chinese territory and are home to 73 percent of the nation's 1.3 billion people, Wu said.
"This means that county-level insurance determines the insurance protection level of the majority of the Chinese people. This is an important issue that the insurance industry cannot ignore," he told a forum sponsored by China Life Insurance (Group) Company.
China's insurance industry has experienced an annual average growth rate of 30 percent during the past two decades.
China Life Insurance Co Ltd (China Life), the listed subsidiary of China Life Insurance (Group), and the PICC Property and Casualty Co are currently the only two Chinese insurers that have branched out into the typically less-developed counties. Other insurers mainly focus on bigger cities and municipalities.
China Life reaped 80.4 billion yuan (US$9.7 billion) in premiums from counties last year, which represented a 71 percent market share, according to Miao Fuchun, the company's deputy general manager.
The need to develop the insurance industry is greater in rural areas, where around 200 million farmers are affected by natural disasters every year, said Jiang Zhenghua, vice-chairman of the Standing Committee of the National People's Congress, China's top legislature.
Farmers are also facing problems such as inadequate coverage for medical and pension expenses, while those of them working in cities as migrant workers are increasingly facing the risk of accidents and injuries, he warned.
But following years of rapid economic growth, the conditions are ripe, at least in some counties and rural areas, for the faster growth of the insurance sector, the officials said.
The 100 wealthiest Chinese counties reported per capita gross domestic product of 24,000 yuan (US$2,890) in 2003, which surpassed many bigger cities.
"There will be more and more such wealthy counties," Wu said. "County-level insurance will be an important growth area for the insurance industry."
Insurers are making progress in counties and rural areas, where insurance reforms are being implemented on a trial basis.
Life insurance premiums from the counties in East China's Anhui Province surged 45 percent in the first 11 months of last year, and accounted for 39 percent of all insurance premiums in the province, Wu said.
"There needs to be a breakthrough this year," he said.
Wu said his commission will encourage insurance companies to set up branches in counties and rural areas this year, especially in less-developed western regions.
Discussions will be held among government agencies on the possibilities of fiscal and financial support, he said.
(China Daily January 15, 2005)
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