2011: China's Maturing Insurance Industry - Rapid Growth in a Public-Private Partnership


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This research report provides an overview and context of China’s insurance market, its history and prospects, surveying the various market segments. The challenges of regulation and maintaining orderly growth in the insurance market are presented. Further, the study investigates the particular challenges faced by foreign companies as they position for opportunity, look to help influence the pace and quality of change in this market, and learn to understand the particular cultural aspects of Chinese consumers and the Chinese regulatory environment. 





1. Introduction



2. Executive Summary



3. Overview of the Chinese Insurance Market: Perception versus Reality



  • Perception: A Compelling Opportunity for Growth


  • What Is the Reality of the Chinese Marketplace?


  • Summary




4. A History and Overview of the Emerging Chinese Insurance Market



  • Brief History of the Marketplace up to 1995


  • The Market’s Development from 1995 to 2010


  • Amending the 1995 Law in 2009


  • Summary




5. The Size and Challenges of Growth of Insurance Segments in China



  • Premium Growth by Sector


  • Growth of Companies


  • Distribution


  • Challenges for Foreign Insurers Operating in China


  • Summary




6. The Impact of Insurance on the Chinese Economy



  • Insurance Promotes Capital Development and Investment


  • Pensions for an Aging Population


  • Summary




7. Comparison of China with India and Brazil



  • Challenges of Managing Growth in an Emerging Market


  • India’s Insurance Market


  • Brazil’s Insurance Market


  • Summary




8. Effect of the 2009 Insurance Law Change in China



  • The Paramount Challenge of Modernizing While Managing China’s Economy


  • Objectives of the 2009 Law


  • Overall Impact of the Changes


  • The Emerging Effects of the Current (2009) Law Going Forward


  • Summary




9. Conclusion



  • Economic Challenges


  • Insurance-Related Challenges


  • Other Recommended Changes


  • Summary




Appendices



A. Summary of Interviews
B. Statistics
C. Key Terms Used in the Text 




Introduction

Throughout the course of its history, China has developed a variety of means for sharing risk. What is today considered modern insurance was first introduced to China by insurance companies from the West at the beginning of the 20th century. From 1949 to 1978, insurance was exclusively the responsibility of the government. The first license to a foreign company was provided to AIG in 1992. The introduction of foreign capital into an arena that was previously exclusively the domain of the government was a sensitive subject 100 years ago, and it remains a sensitive subject today.

At the same time, having a robust insurance market is vital to sustaining economic growth and the development of a capital-based economy. The involvement of foreign capital and processes in this effort is recognized as an important part of accelerating the emergence of this insurance market, but so far the level of foreign participation has been limited.

This research report has three purposes. The first is to provide an overview and context of the Chinese insurance market, reflecting its history and prospects, surveying the various market segments, and examining the Chinese market in comparison to other developing insurance markets.

The second purpose is to explore the challenges of regulation and maintaining orderly growth in the insurance market. These challenges come in the context of enormous economic growth and scale in China. In 2009, the government of China approved an amended version of “The Insurance Law of the People’s Republic of China” from 1995, also known as the “2009 Insurance Law.” Its purpose, as noted in the Law, was to regulate insurance activities, protect the legitimate rights and interests of all parties, strengthen supervision and administration of the insurance sector, promote the healthy development of the sector, and maintain social and economic order. We analyze the intent and reality of the 2009 Law as it affects domestic and foreign insurers.

The third purpose is to investigate the particular challenges faced by foreign companies as they position for opportunity, look to help influence the pace and quality of change in this market, and learn to understand the particular cultural aspects of Chinese consumers and the Chinese regulatory environment.