China’s insurance industry has the conditions for further and speedy opening-up, and further opening up of the insurance industry will benefit China and the world as a whole, industry insiders believe.
As one of the first sectors to open up after China’s entry into the World Trade Organization (WTO), the insurance industry has been playing an important role within the national reform and opening up strategy, said Zheng Wei, chair of the Department of Risk Management and Insurance of Peking University.
The scale of China’s insurance industry has become the world’s second largest, with many domestic enterprises becoming Fortune 500 companies.
The modern insurance industry is an important pillar to high-quality economic and social development, a backbone for perfecting the financial system and an opportunity to guarantee livelihood and innovate social management.
“Furthering the opening up of the industry will provide a bigger platform and more business opportunities for foreign insurance institutions. These measures are not only what the world expects, but also an example of a proactive choice being made by China,” Zheng said.
According to statistics, by July 2017, investors from 16 countries and regions had established 57 insurance companies in China, with more than 1,800 branches.
The market share of foreign-funded insurance companies keeps increasing. Upon China’s entry into the WTO, their market share was less than one percent, and by the end of 2016 that number had reached 5.19 percent. The total assets of the foreign-funded insurance companies will surpass one trillion yuan ($151 billion) by the end of July 2018, which is 300 times what it had been previously.
In big cities, such as Beijing and Shanghai, insurance companies with foreign shares above 25 percent have accounted for more than 20 percent of the market. “In fact, that market share will be higher when foreign shares below 25 percent are counted,” said an official with the supervision department.
The foreign players have undoubtedly brought about many positive changes to the domestic market, for instance, forcing the Chinese companies to work harder, said Wang Xujin, a professor at the insurance department of the school of economics at Beijing Technology and Business University.
Chinese companies have learnt new technologies, management and concepts from their foreign counterparts, and improved services for Chinese consumers, according to Zhong An chief executive Chen Jin.
China targets to build a modern insurance industry offering comprehensive services and full functions by 2020, Wang Xujin said, adding that insurance fees will eventually account for 5 percent of the country’s GDP and furthermore that insurance concentration will come to 3,500 yuan per person by that time.
A more open market needs stricter supervision. China still lags behind developed countries in the business environment and the supervision system. “In the opening process, we should stick to protecting consumers’ rights and guarding a fair business environment,” Zheng Wei said.