China Insurance Market and Technology Trends 2011

by Wenli Yuan, July 26, 2011
Industry Trends
Asia-Pacific

Abstract

The Chinese insurance market is growing quickly. Premium income grew by 39% in 2008, then declined to 14% growth in 2009, but rebounded to 30% in 2010 with the recovery of the market. At the same time, there have been adjustments in many areas such as market structure, products, and distribution.

In a new report, China Insurance Market and Technology Trends 2011, Celent updates findings from our April 2008 report, China Insurance Market and Technology Overview 2008,analyzing changes to the Chinese insurance market since 2008.

The release of new bancassurance policies by regulatory agencies and the implementation of a new statistical calibration for premium income in line with the new accounting standards have reduced premium income in many life insurance companies in 2011. However, these adjustments are beneficial in ensuring the healthy development of the insurance business in the long run.

Despite the decline in market share of foreign-funded and joint venture life insurance companies from 8% in 2007 to 5.6% in 2010, and that of foreign-funded property and casualty insurance companies from 1.18% in 2008 to 1.06% in 2010, premium income is growing consistently, and foreign-funded companies can still benefit from the huge growth in the Chinese insurance market.

Greater diversity will be expected in the distribution channels of the future. With the acquisition of shares among banks and insurance companies, there will be a relatively drastic change in the collaboration between banks and insurance companies, as well as greater depth of collaboration. Online insurance will develop further as the Internet continues to impact our daily lives to a greater extent, and technology such as short messages and mobile wireless networks will be used extensively. Rapid development of e-commerce is also expected for the next few years, and insurance companies will focus their IT investment on this.

Further regulation can be expected on intermediary channels such as agencies and brokers, which will lead to development of such channels. Telemarketing will also grow quickly, while agents will gradually become financial consultants. More companies will adopt new business models such as online insurance sales and online servicing. There will also be significant  development in mobile technology applications such as issuing policies, servicing, and assessing claims.

“In China, the IT used by insurance companies is growing in maturity, automation of business processing is enhanced, and integration between systems is increased,” says Wenli Yuan, Senior Analyst with Celent's Asian Financial Services Group and author of the report. “With e-commerce gaining more attention from insurance companies, information technology will be highly emphasized by these companies.”

This report examines the Chinese insurance market, including areas such as premium incomes, market structure, product trends, and distribution trends, and discusses information technology spending trends.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents

Executive Summary

3

Market Overview

6

 

Insurance Market Is Still Growing Strongly

6

 

Changes in the Market

13

Life Insurance Market

19

 

Structure of the Life Insurance Market

19

 

Development Trends of Life Insurance Products

23

 

Changes in Life Insurance Supervision

25

Property and Casualty Insurance Market

28

 

Structure of the Property and Casualty Insurance Market

28

 

Main Product Categories and Development Trends

32

Insurance Distribution

41

 

Overview

41

 

Various Distribution Channels

42

 

Development Trends of Insurance Distribution

47

Information Technology

48

 

Overall IT Spending

48

 

IT Spending By Categories

50

 

Trends of IT Spending

50

Final Thoughts

54

Leveraging Celent’s Expertise

55

 

Support for Financial Institutions

55

 

Support for Vendors

55

Related Celent Research

56

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