Looking to the future, the insurance industry has attractive prospects for development, the main driving forces of which include: large population size, faster aging trend and higher savings rate; sustained economic development and rising incomes of residents; strong support from policies and regulations; fundamental strengthening of the awareness of risk protection; dismantling of the lifelong welfare system; and a much-improved investment environment.
The main features of insurance products
Traditional life insurance products
Traditional life insurance products provide the most basic function of insurance - survival and old age risk protection. They are specifically categorized into whole life and fixed
term life insurance, whole life and fixed-term dual insurance, whole life and fixed-term annuity insurance, and so on. Its main feature is that the obligations and rights determined by the policyholder are clearly agreed upon in the insurance contract, and are not directly related to the future operating conditions of the insurance company.
New life insurance products
Participating and non-traditional insurance (investment-linked insurance, universal life insurance, etc.) are also referred to as new products since they first appeared late in the Chinese market. The main feature of new products is that they enable interest rate risk to be shared between the insurer and the insured, and they are gradually becoming mainstream products in the international life insurance market.
Participating products are now one of the mainstream products in the international insurance market and one of the most popular products in Southeast Asia
. In North America, more than 80% of the products have with-profits features; in Hong Kong, the percentage is as high as 90%; in Germany, with-profits insurance accounts for 85% of the life insurance market.
China's insurance products have huge room for development
Life insurance accounted for 89% of China's life insurance premiums in 2005, while health insurance and accident insurance accounted for only 8% and 3% respectively. Among life insurance, participating insurance accounted for 60%, general insurance for 21%, and other types of insurance for 8%. China's insurance products have done a relatively good job of diversifying interest rate risk, but they are just starting out in the development of marketing channels and specialization, which has vast room for development.
China's insurance industry is entering an upward cycle
China is the insurance market with the most sustainable growth potential in the world
In 2005, China's insurance density was US$47, and the depth of insurance was 2.7%, of which the depth of life insurance was still only 2.03%, and the density was only US$35 per person, which is far lower than the world's average level, and there is a lot of room for upward movement.
2006-2015 "demographic dividend" nurtures the golden period of life insurance industry development
2006-2015 is the period when China's demographic burden coefficient continues to reach a record low and the population of young and middle-aged labor force reaches a record high, and it is also the critical period for China to establish a pension and medical insurance system covering the whole population, which is the key period for commercial insurance to assume the function of social management and to provide a comprehensive insurance system. Commercial insurance will develop by leaps and bounds while assuming the function of social management, and the implementation of tax incentives will become an important driver of the industry's leapfrog development.
The rapid rise of the middle-income class will significantly increase the proportion of life insurance and investment products
According to estimates, the number of middle-income families in China's urban areas will increase to nearly 200 million by 2015, with an average annual growth rate of more than 20%. At present, nearly 90% of the financial assets of China's residents exist in the form of bank savings, and the proportion of life insurance purchased is less than 6%. The middle-income class, which is in a period of social transition, has a much stronger demand for insurance, and also has the actual purchasing power.
China's insurance market is the third largest in Asia after Japan and South Korea, and the ninth largest in the world. According to the CIRC, China's life insurance premium income and property and casualty insurance premium income grew at a compound annual growth rate of 26.4% and 17.3%, respectively, between 2000 and 2006, making it one of the fastest growing insurance markets in the world.
China's insurance depth and density are significantly lower than the world average, with huge development potential. 2006 China's life insurance depth was 1.7%, far lower than the world's average insurance depth of 4.5%; the life insurance density was $34.1, equivalent to 10.3% of the world's average insurance density of $330.6. 2006 China's property and casualty insurance depth was 1.0%, lower than the world's average insurance depth of 3.0%, and the world's average insurance depth of 3.0%, which was 1.0%. In 2006, China's general insurance depth was only 1.0%, lower than the world's average insurance depth of 3.0%; and general insurance density was only US$19.4, equivalent to 8.65% of the world's average insurance density of US$224.2.
With the sustained rapid and stable growth of GDP, the improvement of insurance depth and density, demographic dividend, residents' consumption upgrading, as well as the government's strong support for the insurance industry, China's insurance industry will enter a period of rapid development, and the compound annual growth rate of premium income in the next 10 years is expected to exceed 15%.
Extended reading: insurance how to buy, which is good, hand to teach you to avoid the insurance of these "pits"