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China's insurance premiums rose by 15.39 percent in the first five months of the year to 219.5 billion yuan (US$26.5 billion), the China Insurance Regulatory Commission (CIRC) said yesterday.
Premiums from property and casualty insurance increased by 20.5 per cent from a year earlier to 56.98 billion yuan (US$6.9 billion), the commission said.
Life insurers collected 162.5 billion yuan (US$19.5 billion) of premiums in the five months, it said.
China's insurance industry has been growing fast in recent years on the back of its robust economic growth and growing awareness of risk protection among local residents.
Premium growth averaged an impressive annual 30 per cent over the past two decades.
The huge potential of the market has attracted a growing number of foreign insurers, who are seeing their market share growing rapidly in wealthier cities such as Shanghai and Guangzhou.
The liberalization of the local market, driven by China's World Trade Organization commitments, is propelling their growth even further.
This was best demonstrated earlier this year by Generali China Life Insurance Co Ltd, a 50-50 venture between Generali and China National Petroleum Corp (CNPC).
The company's 20 billion yuan (US$2.4 billion) pension plan contract with its shareholder CNPC in March, just a few months after group insurance was opened to foreign insurers, brought its share in premiums by all foreign insurers in March to nearly 90 per cent, and boosted that of foreign insurers in total premiums in the local market to over 20 per cent, compared to 2.64 per cent for last year.
Generali China had 12.5 per cent of the market in the first five months of this year and remained the largest foreign life insurer in China, a title it took over from American International Assurance with the CNPC deal.
The fierce competition from foreign rivals has pushed local insurers to focus more on profitability rather than market share.
Subsequently, the growth pace of premiums downshifted last year, particularly in the life insurance sector, where major local players are still undergoing a major business reshuffle to trim unprofitable operations.
Total premiums collected last month slid by a marginal 0.48 per cent from a year earlier to 34.6 billion yuan (US$4.1 billion), the CIRC said yesterday.
In the life insurance sector, premiums fell from double-digit rates in the previous year to only around 7 per cent last year.
A lot of the adjustments took place in single-premium investment-type products that are mostly sold at bank counters, which has caused worries among regulators about the growth momentum of bancassurance.
In previous years China's bancassurance market showed rapid growth as insurers explored the new distribution channel for faster premium growth.
Sales through banks totalled 4.5 billion yuan (US$542 million) in 2001, surging to 79.5 billion yuan (US$9.6 billion) last year, accounting for 25 per cent of all life insurance premiums.
(China Daily June 22, 2005)
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