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Life premiums expected to top US$160b by 2012
By Zhang Fengming |
February 18, 2009, Wednesday
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Print Edition
Print Edition
THE growth of the middle class and penetration in the markets in tier-two and tier-three cities will boost life insurance premiums in China to US$160 billion by 2012 from US$100 billion last year, McKinsey & Co said yesterday.
Life insurance premiums are forecast to grow at a compound annual growth rate of 16 percent to 19 percent in 10 years, the consulting firm said in Shanghai. The increase in premiums is expected to push China up two notches to rank as the fifth biggest life insurance market in the world from No. 7 now.
"In five years to 10 years, about 40 percent of the world's total premiums are expected to come from Asia, with China contributing about 30 percent to 40 percent to the premiums in Asia," said Stephan Binder, a McKinsey&Co director, in Shanghai.
The growth of the middle class, the insurers' penetration growing from big cities like Shanghai and Beijing to smaller ones, the expansion of sales channels and China's strong household savings are contributing to the strong premium growth, the consulting firm said.
The firm expects 50 million to 70 million more Chinese families to have an annual income of over US$10,000 between 2007 and 2012, which will bring in up to 150 million new insurance clients. The tier-two and tier-three cities will account for a combined 88 percent of China's total life premiums by 2012.
Insurers are expanding their sales channels for life insurance by tying up with banks. The US$3 trillion in household savings of the Chinese will boost the growth, McKinsey said.
Binder said despite the financial crisis, China's economy is set to grow over the mid-term, boosting life insurance.
"There are more reasons to be optimistic than to be pessimistic," said Joseph Ngai, a partner at the firm.
Life insurance premiums are forecast to grow at a compound annual growth rate of 16 percent to 19 percent in 10 years, the consulting firm said in Shanghai. The increase in premiums is expected to push China up two notches to rank as the fifth biggest life insurance market in the world from No. 7 now.
"In five years to 10 years, about 40 percent of the world's total premiums are expected to come from Asia, with China contributing about 30 percent to 40 percent to the premiums in Asia," said Stephan Binder, a McKinsey&Co director, in Shanghai.
The growth of the middle class, the insurers' penetration growing from big cities like Shanghai and Beijing to smaller ones, the expansion of sales channels and China's strong household savings are contributing to the strong premium growth, the consulting firm said.
The firm expects 50 million to 70 million more Chinese families to have an annual income of over US$10,000 between 2007 and 2012, which will bring in up to 150 million new insurance clients. The tier-two and tier-three cities will account for a combined 88 percent of China's total life premiums by 2012.
Insurers are expanding their sales channels for life insurance by tying up with banks. The US$3 trillion in household savings of the Chinese will boost the growth, McKinsey said.
Binder said despite the financial crisis, China's economy is set to grow over the mid-term, boosting life insurance.
"There are more reasons to be optimistic than to be pessimistic," said Joseph Ngai, a partner at the firm.
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