Premium income and total asset of the Chinese insurance industry increased significantly in the first nine months of 2008 but insurers need to follow precaution to avoid global financial crisis.
As per China Insurance Regulatory Commission (CIRC), the premium income generated by the insurance companies in the country during the first three quarters of 2008 rose to 793.96 Billion Yuan ($116 Billion), an increase of 49% from the corresponding period a year ago, as reported by Forbes.
The total assets of insurers in China increased from 3.04 Trillion Yuan ($444.6 Billion) in August 2008 to 3.1 Trillion Yuan ($452.8 Billion) in September 2008. Insurance companies’ total premium for the first eight months of 2008 was recorded at 713.40 Billion Yuan ($104.2 Billion), with total assets of 3.0425 Trillion Yuan at the end of August 2008.
As per the new research report “Booming China Insurance Sector” by RNCOS, personal insurance premium is expected to grow at a CAGR of nearly 24% during 2008-2012 to RMB 1.5 Trillion by the end of 2012.
The Chinese insurance sector is greatly benefitting from the surging demand for insurance products. Moreover, changing social structure and rising number of educated people has played a critical role in the growth of the insurance industry.
Other key factors driving growth in the Chinese insurance industry include rising middle class, tax relaxation and growing population. Besides, domestic insurance companies are aggressively promoting their products and releasing new products, which are encouraging people to invest more and more in the sector.
Although the Chinese insurance industry premium is increasing at a rapid pace, the revenue growth is set to slowdown in the Q4 2008 and H1 2009, according to the industry experts. This is primarily due to retaining of dividends by the companies to save profit margin which was badly hit by the slump in the stock investment. Moreover, this is likely to slowdown the premium growth in future.
According to a Research Analyst at RNCOS, “The Chinese insurance industry seems to have remained unaffected by the economic slowdown because it is more conservative in terms of investment exposure to volatile foreign assets. But insurers need to take precautionary steps to avoid any impact of global financial crisis. This will help in sustaining growth in the industry in future.”
Related Market Research Reports:
Booming China Insurance Sector
Vietnam Insurance Sector Forecast to 2010
Booming Insurance Market in India (2008-2011)
