Mainland life insurance forecast calls for 10% growth
By Feng Jianmin |
December 5, 2012, Wednesday
|
Print Edition
Print Edition
THE Chinese mainland's life insurance market will grow 10 percent annually in the next five to 10 years and surpass Japan to become the world's second largest by 2020, a McKinsey report said yesterday.
An optimistic economic outlook, increasing individual wealth and aging society will lift demand for life insurance and create a potential market of 4 trillion yuan (US$640 billion) by 2020, second only to the US.
"The mainland market is relatively profitable and immature," said Stephan Binder, a director at McKinsey. "Total life insurance premiums amounted to 2.5 percent of gross domestic product in 2010, only a quarter of the Hong Kong market."
But he noted the market will not resume the 20 percent plus growth that was recorded in the past decade while slower GDP growth, a low interest rate environment and volatile capital market will pose challenges for life insurance companies.
"Chinese life insurers emphasize premium growth since this is the metric the domestic industry uses to rank them," the report said. "To ensure sustainable growth, the insurers should shift their focus from scale to value."
Binder added life insurers operating in China will have to improve the quality of products and the efficiency of agency and bancassurance channels to meet the demands of clients.
An optimistic economic outlook, increasing individual wealth and aging society will lift demand for life insurance and create a potential market of 4 trillion yuan (US$640 billion) by 2020, second only to the US.
"The mainland market is relatively profitable and immature," said Stephan Binder, a director at McKinsey. "Total life insurance premiums amounted to 2.5 percent of gross domestic product in 2010, only a quarter of the Hong Kong market."
But he noted the market will not resume the 20 percent plus growth that was recorded in the past decade while slower GDP growth, a low interest rate environment and volatile capital market will pose challenges for life insurance companies.
"Chinese life insurers emphasize premium growth since this is the metric the domestic industry uses to rank them," the report said. "To ensure sustainable growth, the insurers should shift their focus from scale to value."
Binder added life insurers operating in China will have to improve the quality of products and the efficiency of agency and bancassurance channels to meet the demands of clients.
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