 |
Insurance Market: Fierce Competition, Huge Potential
Socially and politically stable and for a fast-growing economy, with a huge population, and welfare reforms being carried out, these have made China's insurance market quite attractive to investors both in China and abroad, says Meng Zhaoyi, vice director of the International Department of China Insurance Regulatory Commission (CIRC).
China began to have its first insurer in 1949, but all businesses related were practically called to a halt in 1960. When resumed in 1980, the nation's insurance premium was only 640m yuan. While last year the figure reached 159.6bn yuan, showing a yearly average growth of 26 percent within 20 years.
Though developing rapidly, China's insurance market is still lagging behind other foreign counterparts. The world community usually uses indicators as insurance density and penetration to evaluate an insurance market. China's insurance density (premiums per capita) was 127 yuan last year, while the world average was around US$360. The penetration (percentage of premium in GDP) was no more than 1 percent, whereas the world level stood between 6 and 7 percent.
The two low indicators show both the backwardness and huge potential of China's insurance market, and that is why many foreign investors cast their eyes on the Chinese market. With a fast-growing economy the potential may well be tapped.
The assets of China's insurance industry value 337.4bn yuan, while an international medium-sized company claims over US$100bn assets. So Meng predicts the industry would surely face fierce competition after China's WTO entry.
Chinese insurers should in an opening market learn advanced theories and practice in management, sales and product development to promote the country's insurance industry, says Meng. Besides, foreign capital should be regarded as part of Chinese market instead of enemies of domestic insurers.
Currently there are 19 foreign-funded insurance companies and 27 foreign business institutions in China, posing no little pressure on 13 domestic insurers. Chinese insurers should be fully prepared, especially in their management, in the face of fierce competition of foreign rivals after China's WTO entry.
While domestic insurers have advantages in their familiarity with local culture, law, financial system, and consumers. They must raise their service awareness and lift service standard.
As for talent flow during the naturalization process of international companies, Meng says it's inevitable in a short period, for besides income there are many factors in the flow as knowledge, position and personal impact on a company.
By PD Online staff member Li Heng
In This Section
|