China's first specialized health insurance company was established Thursday, blazing a new trail for accelerating the growth of the nation's hugely promising health insurance sector.

The PICC Holding Company, which controls PICC Property and Casualty Co., Ltd., China's largest non-life insurance operator, has a controlling stake in the PICC Health Insurance Co., Ltd., reported Friday's China Daily.

DKV, Europe's largest private health insurance company, and three other Chinese companies, including China Huawen Investment Holding Co., Ltd., are also shareholders.

PICC Health is the first of China's newly-approved four specialized health insurance providers to complete establishment procedures, which regulators expect will help augment commercial health insurance in the local market to complement a weak social medicare system.

The demand for health insurance is tremendous in the world's most populous country. As high as 65 percent of Chinese residents list illness as one of their three greatest concerns, PICC Holding officials said.

Despite the huge growth potential, commercial health insurance is still playing a minor role in the local market, covering only ameager 10 percent of local residents' total medical expenditures.

Nearly all local health insurance providers are frustrated with the high risk in the business. Loss ratios for health insurance amount to as high as 200 percent for some insurers in recent years.

Some even reportedly suspended the sale of health insurance products earlier this year.

Analysts say a variety of problems are hindering the growth of health insurance, including moral hazards, high medical expenditures, serious price competition, low pricing standards andpoor services.

Source: Xinhua