Life insurance and non-life insurance premiums in China grew 9.4% and 12% respectively in Q1 2009 despite the economic slowdown.
The China Insurance Regulatory Commission has released the statistics of insurance premium income for the first quarter of 2009 that surged by 10% to the total of 327.7 Billion Yuan ($47.98 Billion) over the same period a year ago, as reported by China Daily. The statistics don’t include the revenue from reinsurance sector.
Premiums generated by life insurance swelled to 255.8 Billion Yuan ($37.47 Billion) at the growth rate of 9.4% in Q1 2009, while premiums from property and casualty segment surged 12%, reaching 71.86 Billion Yuan ($10.53 Billion).
Meanwhile, insurers received the return on their investment at the rate of 1.4%, realizing an investment profit of 43.3 Billion Yuan ($6.34 Billion) in Q1 2009. The total assets of the Chinese insurance industry inflated to 3.5 Trillion Yuan by the end of March 2009, an increase of 6% from the start of 2009.
Despite the gloomy economic condition, the Chinese insurance sector observed a positive growth in Q1 2009, though the growth was slow. The growth came as a result of structural improvement of the sector. Moreover, usually, there is sufficient solvency in this industry and risks remain under control.
Besides, the Chinese insurance companies have changed their strategies as they are focusing on long-term insurance products with safer returns against short-term investment products, which proved profitable for them. In fact, some insurance companies have introduced tailored their products to meet the requisites of businesses and individuals as they become more acquainted with their needs of adequately protected financial products.
In addition, insurers are refraining to make risky investments at stock markets, following the recent ups and downs in the markets. This precautionary approach will also infuse growth in the insurance sector of the country.
RNCOS in its research report, “Booming China Insurance Sector”, highlights that the life insurance premium income will rise to about RMB 1384 Billion by the end of 2012 with a CAGR of nearly 25.5%.
According to a Research Analyst at RNCOS, “Although insurance industry in terms of premium is growing at a rapid pace, profitability of the industry may be on the stake, as insurers have a significant exposure to the stock market. Therefore, insurers should revise their investment portfolio and should focus more on investment instruments providing fixed returns”.
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