China’s insurance industry is experiencing huge growth and the insurance premiums are on their way up. This is the result of positive correlation between economy and society.
Insurance is coming up as one of the highest growing industries in China and registered a rise of 25% in premium revenue in 2007, as per Wu Dingfu, Head of China Insurance Regulatory Commission (CIRC), according to news published by Xinhuanet.
The CIRC stated that in totality, the premium revenues reached $96.4 Billion (Yuan 703.6 Billion) in 2007 against $78.36 Billion (Yuan 564.1 Billion) in 2006. Moreover, premiums for property insurance increased by 32.6% year on year to $27.75 Billion (Yuan 199.8 Billion) in 2007, and life insurance grew by 24.5% to $62 Billion (Yuan 446.4 Billion).
The reason for this aggressive growth lies in the flourishing economy and high population of the country. Increasing population leads to need of more homes and thereby, requirement of household insurance is escalating in China. As a consequent of high demand, insurance industry is attracting many players to operate, and hence, the competition has increased in the Chinese insurance industry. This is highlighted by the fact that almost 47 insurance companies got funding from foreign-owned bodies out of total 135 insurance companies in the country.
High competition among insurance companies in China is leading to increased efficiency, superior quality and new schemes and continuous introduction of new insurance packages.
Moreover, the rising education in China and the increasing living status of its people are acting as catalyst for pronounced growth of the insurance companies. Due to education, people are earning more and hence, the need for securing life is arising. Further, because of overall increase in lifestyle and living status, people are investing in vehicles and this augments the non-life insurance sectors, a component of insurance industry. Chinese people are investing increasingly in home and vehicle insurance.
A research report, “China Insurance Sector till 2010”, by RNCOS said that China will take advantage of these favorable insurance conditions in future. It also says that Chinese insurance industry will see more favorable environment in coming years. Macro view of the national economy of the country and current situation explains the favorable correlation between society and economy, which, in turn, is increasing the demand for insurance.
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