China Insurance Report Q1 2013

Includes 3 FREE quarterly updates

The China Insurance Report considers the prospects for both life and non-life insurers in that country. The slowing of the economy appears not to be having 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 16% through 2012. 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 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.

In the life segment, gross written premiums contracted during calendar 2011. As of November 2012, it appears that they have (just) returned to growth in calendar 2012. Challenges include the economic environment, the widely publicised restrictions on bancassurance sales that were imposed by the China Banking Regulatory Commission (CBRC) and competition from wealth management products, which are also distributed by banks. Nevertheless, the latest reports from the leading Chinese life insurance companies in relation to their operations in H112 and the first three quarters of the year 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) has strengthened 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.

Over the last quarter, BMI has made the following changes:

• The company profiles have been comprehensively rewritten and, in many cases, include comments published in late 2012 in relation to H112 and Q312.
• The latest forecasts and projections for China's economy, along with key aspects such as healthcare spending, have been incorporated.