Insurance sees big growth
( 2003-07-10 10:07) (China Daily)
China's insurance industry witnessed robust growth in the first half of this
year despite the SARS outbreak disrupting normal sales, the chairman of the
China Insurance Regulatory Commission said Wednesday.
Chairman Wu Dingfu told
the commission's twice-yearly conference yesterday: "The overall development of
the insurance industry was healthy, business growth was steady and compensation
pay-outs were basically stable.''
Industry-wide premiums rose by 32 per cent
on a year-on-year basis in the first six months of this year to 212.6 billion
yuan (US$25.6 billion), according to commission statistics.
Property
insurance premiums stood at 47.4 billion yuan (US$5.7 billion), up 11.8 per cent
from a year earlier.
Life insurers gained 165.3 billion yuan (US$19.8
billion) in premiums, a surge of 39.3 per cent on a year-on-year basis. This was
despite difficulties in marketing efforts caused by the SARS outbreak, which had
resulted in 4.2 million yuan (US$506,000) being paid in compensation in the
first half of this year.
Compensation pay-outs in the industry as a whole
rose by 23 per cent year on year in the first six months of the year to 26.7
billion yuan (US$3.2 billion), the commission said.
Wu said the industry's
image had been improved by insurance companies' efforts to develop new products
that cover SARS and to improve services in the nationwide battle against the
virus in the past few months. However, policyholders had also criticized
misleading promotions and exaggerated promises of returns by some life-insurance
companies.
As premiums continued to grow rapidly, the official said his
commission was actively examining ways to further broaden investment channels
for insurance companies to get higher returns on their assets to ensure their
repayment capacity.
Early last month, the commission introduced a looser
regulation for bond investments. Previously, companies could only buy bonds
issued by central government-affiliated enterprises but now they can buy bonds
issued by all businesses with a credit rating of at least AA.
Insurance
companies can now use up to 20 per cent of their total assets to purchase
corporate bonds, compared to a previous ceiling of 10 per cent.
The
commission is working to raise the ceiling even higher, "hopefully by the end of
this year,'' Wu said.
The chairman said joint-stock reform by major
State-owned insurance companies have "entered a critical stage.''
Wu stressed
that the goal of the reform was to build a modern enterprise system and improve
competitiveness. He urged companies seeking overseas public listings to "boldly
tap advanced foreign technologies and managerial expertise and give full play to
overseas strategic investors' role in improving the company's decision making
and internal management.''
The People's Insurance Co of China, the largest
State-owned non-life insurer, is one firm undergoing restructuring. It is said
to be scheduled to unveil its shareholding company later this month, which may
suggest that its flotation is only days away.
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