China's insurance industry continued on its path of rapid growth
last year, boosted by seemingly unstoppable momentum in one of the
world's fastest-growing economies.
The China
Insurance Regulatory Commission (CIRC) said Monday total
insurance premium income for 2003 jumped by 27.1 percent on a
year-on-year basis to 388 billion yuan (US$46.7 billion).
Life premiums came in at 301 billion yuan (US$36 billion), up
32.36 percent from a year earlier, while property premiums stood at
87 billion yuan (US$10.4 billion), an increase of 11.71 from
2002.
Premium growth slowed down from 2002's 33 percent, which the
commission said was largely due to business readjustment measures
as some insurance companies trimmed risky business in a bid to
improve profitability.
Many Chinese insurance firms took measures last year to optimize
business strategies, enhance internal control and improve product
structure, after the CIRC stressed the balance between premium
growth and profitability at the beginning of the year.
The SARS (severe acute respiratory syndrome) outbreak last year
only mildly disrupted life insurance sales in some regions of the
country, the CIRC said, but served to catalyze a surge in demand
for insurance coverage.
Insurers garnered 34.6 billion yuan (US$4.1 billion) in health
and casualty insurance premiums, soaring by nearly 70 percent from
the previous year.
China's insurance market remains small, compared to other
countries, despite high growth in recent years. Premiums accounted
for only 3.33 percent of the nation's gross domestic product last
year, while its insurance density, as measured by per capital
insurance expenditure, stood at a meagre 28.7 yuan (US$3.5).
The Chinese economy expanded by 9.1 percent last year, the
fastest pace since 1997.
Last year's reforms to liberalize premium rates on auto and
aviation casualty insurance proceeded smoothly, the commission
said, and market performance has been stable.
Auto insurance premiums registered 54.5 billion yuan (US$6.5
billion) last year, up 14 percent from a year earlier.
The rate liberalization reform had fuelled undercutting among
auto insurers in 2002 and early last year, which had resulted in an
aggregate loss among all market participants. Rates rebounded later
last year as the reform proceeded.
"Thanks to the reform, insurance companies are increasingly
abiding by market rules and rate levels are improving, catering to
market demand fairly well," the CIRC said in a statement.
The commission also noted a significant improvement in the
industry's risk resistance capacity as continued premium growth
boosts assets and the initial public offerings of two leading
state-owned insurers greatly bolstered the industry's aggregate
capital strength.
The combined assets of all Chinese insurance firms stood at
912.3 billion yuan (US$109 billion) at the end of last year, up
41.45 percent year on year.
The industry's total payments, which include claims and
benefits, stood at 84.1 billion yuan (US$10.1 billion) last year,
the commission said.
Insurance companies continued to leave the bulk of their funds
with banks as the authorities moved gingerly to loosen investment
restrictions.
Bank deposits totaled 455 billion yuan (US$54.8 billion) at the
end of last year, which accounted for 52 percent of the insurers'
total investments, while another 140 billion yuan (US$16.8
billion), or 16.1 percent of total investments, was held in
treasury bonds.
(China Daily February 10, 2004)