The Chinese insurance market is growing quickly, reports Celent. 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 finds that 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.
According to the report, 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, notes the report.
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.”
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