French agricultural insurance giant Groupama SA unveiled its
first Chinese branch in Chengdu, Southwest China's Sichuan
Province Tuesday, launching its foray into a vast new local
market.
Groupama became the first European insurer a year ago to be allowed
to operate a wholly-owned non-life insurance business in western
China. Chinese insurance authorities are pinning high hopes on the
French insurer to help expedite growth of long-dormant agricultural
insurance in the local market.
The Chengdu branch will sell three product packages in the first
stage in the agriculture-heavy province, which cater to rural and
urban residents, as well as small and medium-sized enterprises and
private commercial and industrial businesses, the company
said.
"We believe in China's development and the huge potential of the
Chinese insurance market," said Jean Azema, chief executive officer
of Groupama. "The commencement of the Chengdu branch is the first
step of our growth in China."
Azema said his company also plans to apply for a life insurance
licence in China to supplement risk coverage for farmers. Life
insurance and non-life insurance are separately regulated in
China.
The insurance coverage for Chinese farmers and agriculture is
highly insufficient to protect farmers from risks as even the
long-dominant providers have largely withdrawn from the risky
business in the absence of government support.
Premiums from agricultural insurance totaled a meagre 460 million
yuan (US$55 million) last year, 0.5 percent of all property
insurance premiums.
The authorities recently announced the establishment of three
specialized local agricultural insurance companies in an attempt to
revive the business, but also expressed expectations that the
French insurer could contribute with its 100 years of
expertise.
Groupama was established in 1900 and controls two-thirds of
France's rural market. It focused on rural France until its
takeover in 1998 of Gan, the third largest French Insurer. That
enabled its leapfrog into the cities and foreign markets.
The company introduced a variety of new products into the Chinese
market in three packages, including unexpected job loss,
hospitalization subsidies, countryside tourism and entertainment
liability insurance.
It will sell policies both through agents and banks. The company
plans to set up 10 sales outlets as the first step, including five
in the Chengdu city and five in its suburbs.
The insurer also announced a strategic alliance Tuesday with
Agricultural Bank of China (ABC), one of China's four largest
State-owned commercial banks and the nation's largest rural lender.
The alliance will allow Groupama to sell its products through the
bank's 2,300 counters and 1,700 agents throughout in Sichuan.
Sichuan is one of China's main agricultural producers. Some 70
percent of the 87 million people are engaged in farming, and
agriculture accounted for more than 20 percent of the province's
gross domestic product last year, according to Yang Zhiwen,
vice-governor of Sichuan.
Although the average income of farmers in the province is still
low, the huge potential of rural Sichuan will provide abundant
growth opportunities for agricultural insurance, he said.
Migrant workers from Sichuan, who are originally farmers, remitted
home a combined 31 billion yuan (US$3.7 billion) they earned in
other parts of the country last year, up 26 percent on a
year-on-year basis, Yang said.
(China Daily October 27, 2004)