Insurance
Insurance Branch Office Signifies Growth of China's Market
The Swiss firm Winterthur Insurance became the fourth foreign firm to open a branch office in China, following American International Group, Tokyo Marine and Fire Insurance Co., and Canada's Manulife Insurance. Although 70 foreign insurers have opened over 140 representative offices, only a branch office can actually do business in China. Winterthur will provide property insurance services in Shanghai. Last year, income from insurance premiums grew by 23% in China to surpass $7.3 billion. Over 900,000 businesses and 180 million individuals have purchased property insurance in China since 1995.
China Daily (PRC), 12/10/96
Chubb Insurance to Cover Electronics Sector
Chubb Group, the fourth-largest US insurance company, is poised to invest in coverage of China's rapidly growing electronics industry. Although the concept of insurance is new to the electronics sector, and risk is high, a Chubb manager feels that China will become a world electronics leader once its electronics industry is insured. China's electronics industry is expected to grow by 20% annually during 1996-2000, and total market capacity for the sector is expected to grow from $38 billion this year to $120 billion in 2000 to $723 billion in 2010. Chubb also provides insurance for the Chinese energy, finance, steel, and food processing sectors. China's present insurance market is estimated at $1.5 billion for life insurance and $6.5 billion for non-life insurance. China is expected to have the world's second largest market for insurance business in the coming ten years.
China Daily (PRC), 12/13/96
Insurance Market Competition Increasing
With the opening of a joint venture by Canada's Manulife Insurance, as well as the imminent arrival of the Swiss insurance firm Winterthur and the German firm Allianz, competition is set to increase in China's insurance market. The arrival of American AIG Insurance in Shanghai two years ago caused a large upheaval throughout the market as the American firm employed door-to-door sales tactics new to China. The presence of more foreign firms is expected to further shake up the market, with Shanghai the main battleground. However, China's three largest domestic firms are expected to continue to dominate the market as a whole over the next five years, as foreign insurers can still only operate in Shanghai and Guangzhou. The market's potential is still limited due to insufficient regulatory supervision. In addition, premiums for both foreign and domestic firms are deposited in banks, where interest rates are often lower than inflation, raising the specter of insufficient funds to pay out claims many years down the road.
South China Morning Post (HK), 12/27/96
China Plans to Open Insurance Market
China hopes to open its insurance industry wider in 1997, and participate in the international insurance market. There are currently 21 insurance companies in China, including seven foreign firms. Total premiums paid in China were nearly $4.5 billion in the first half of 1996, although the market continues to be undeveloped, especially away from coastal regions. In 1997, China hopes improve the legal system governing the insurance market, to increase administrative supervision of the industry, to add more firms, and to open the market further to the outside world.
China Economic Information (PRC), 12/28/96
China Protects Domestic Insurers
China's financial services sector is continually liberalizing and the fledgling insurance industry is growing rapidly. Although domestic companies have been given the go ahead to practice insurance, foreign companies are only slowly being allowed to enter. "There is a slight speeding up, but the Chinese are not breaking open the dam," says Douglas Henck, senior vice president of Aetna International, and arm of Aetna Inc. Until the Chinese are comfortable with competition, the opening of the sector will be managed carefully, he said. The Chinese market is now dominated by the People's Insurance Company Group of China. Around 10 new competitors have brought it's market down from 90 percent to 70 percent in the last two years.
China Trade Report (Hong Kong), 01/01/97
Re-insurance Sector Booms in China
Despite central bank concerns over losing foreign exchange, the China re-insurance market is doing very well for foreign insurance firms. A market for re-insurance of infrastructure as well as commercial projects is increasing rapidly even in the face of the tight restrictions on foreign insurance firms. Those in the industry say the growth rate may be 30-40 percent a year while another said it was around 20 percent. "The market is developing very fast, and sometimes insurers can't cover all the risk so they must re-insure part (of it) on the international market," said a manager with an insurance broker in Shanghai. "More and more re-insurance is being sold outside China, which is alarming the People's Bank of China," said a European insurance firm analyst.
Reuters (U.K.), 04/01/97