"China Insurance Report Q1 2014" is now available at Fast Market Research

As of 2013, it appears that China's life segment returned to growth over the course of the last 12 months or so. A number of factors have underpinned the steady growth of the non-life segment.

Key Insights And Key Risks

The past slowing of the economy appears not to have had a material impact on the overall fortunes of the non-life segment, where official data indicates that premiums (including health insurance and personal accident lines) have been rising at an annual rate of around 13%. In essence, the non-life companies have responded to the more difficult economic environment by cross-selling, developing new distribution channels such as telemarketing and introducing new products. Government measures to boost usage of insurance in rural areas have also been beneficial. Particular regional markets within China have been very competitive. However, many of the leading non-life companies are actively working to boost customer service (eg with claims handling) and/or to lift underwriting profits. Looking forward, it is clear that the development of health insurance will be a key driver of growth.

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In the life segment, gross written premiums contracted during calendar 2011. As of late 2013, it is clear that they have returned to growth. The restrictions on bancassurance sales that were imposed by the China Banking Regulatory Commission (CBRC) remains a challenge. So too does competition from wealth management products, which are originated and distributed by the banks. Nevertheless, the latest reports from the leading Chinese life insurance companies in relation to their operations in H113 suggest that they are lifting new business sales and/or profitability. As is the case in the non-life segment, the life companies are introducing new products, developing new distribution channels and doing what they can to boost sales through existing channels. Several companies have indicated that they have been able to achieve meaningful growth (by some metrics and across at least some of their businesses) by developing the agency channel at a time of (sharply) reduced sales through the bancassurance channel. Meanwhile, most of the foreign companies that are active in China's life segment are growing sales and/or profitability - in many cases because they are focusing on geographic or product niches.

Over the course of 2012, the China Insurance Regulatory Commission (CIRC) enhanced the rules governing sales by life companies (especially). This should strengthen the reputation of life insurance as a conduit for organised savings over the long-term. CIRC has also liberalised the rules governing investment by insurance companies - which will provide new opportunities at a time of low interest rates and often volatile financial markets.

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