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Brief History Of China's Insurance Industry
The current largest insurers in the world including American Insurance Group (AIG) of United States, were founded in Shanghai in 1919.
Before 1949, China's insurance industry was controlled by maximum foreign companies operating in Shanghai. . Most other insurers were large foreign companies that left china entirely after 1949, though some retreated to Hong Kong.
From 1949 to 1976, the insurance industry in china essentially ceased to exist. Few Chinese owned personal property, and almost all businesses enterprises were government-owned and "self-insured."
Economic Reforms and China's Insurance Industry
In 1978, as part of the Deng Xiaoping-initiated economic reforms and opening up of door policies. China economy began to resume the insurance industry through the reestablishing the
People's Insurance Company of China (PICC). PICC had monopoly position in China's
emerging insurance market. In 1996, PICC was divided into three independent companies.
In 1998, the PICC group was disbanded and the 3 PICC companies were renamed
- china Life Insurance
- China Property Insurance (PICC),
- china Reinsurance
In November of 1998, the State Council devolved supervision functions from the People's Bank of China to the newly established China Insurance Regulatory Commission (CIRC).
Economic reforms led foreign enterprises to play a role in the revival of China's insurance industry beginning in 1992. In September of 1992, the People's Bank of china granted AIG a permit to begin selling individual life and property insurance in Shanghai.
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From 1992 to 2000, China gradually approved the re-entry of 16 additional leading foreign insurers. Economic reforms in china has increased the foreign participation in Insurance industry in China.
In 1980, when the insurance market was first reopened as part of the post financial reforms, insurance premiums totaled only RMB 640 million (US$ 77.4 million).
Present Potential Of China's Insurance Industry
Beginning in 1980, China's insurance market grew at an average rate of 26%, reaching RMB159 billion (US$19.2 billion) by the year 2000.The growth rate of insurance premiums is projected, reaching RMB 280 billion (US$33.7 billion) by the current year 2005.
According to the report in 2000, the Chinese insurance density (premiums per capita) was RMB127 (US$15.30) in contrast to the world average of US$ 360.China's percapita spending on Insurance is very fast in the recent years.
For the year 1996 China's Economy reforms was young which led Chinese per capita spending on insurance to US$ 7.64 in comparison to tin aged Economic reforms of India at US$1.7.
Conclusion
Given that China's economy has grown near about 8% per year since 1979.Most foreign investors including those in the insurance sector do not want to be left out of the most rapidly expanding and largest potential insurance market in the world.
China's insurance industry has made rapid advances after opening of the market to FDI. Presently as a result of WTO negotiations, China has agreed to completely open its financial services market, including insurance. The WTO accession has stimulated much additional Chinese reform activity to prepare China's domestic insurance market for vastly increased foreign participation and competition.
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