According to McKinsey& Company, China will be one of the top five life insurance markets in the world by 2015 with up to $275 billion gross written premiums (GWP). The rapid emergence of the middle class, the shift of high savings to investment products and broader distribution channels will contribute to the growth.

“The slumping demand, shrinking bancassurance and the regulatory move arising from the financial woes may affect life insurers in the short term, but the market in China is promising in the future,” said McKinsey partner Joseph Ngai.

It is indicated that GWP in the domestic life insurance market will grow annually by 16-19 percent over the 10 years since 2007, and up to touch $220 billion to $275 billion by 2015, from $100 billion in 2008.

Stephan Binder, director of McKinsey’s Shanghai office, said ,We believe that in the next five to 10 years, 40 percent of the global insurance growth in life insurance will come from Asia, 30 to 40 percent will be from China,”

The company said that about 50 to 70 million Chinese households will join the $10,000 annual income to the burgeoning middle class between 2007 and 2012. Thus 100 to 150 million new customers will buy life insurance for the first time.

What’s more, McKinsey said that the third-tier cities will see an increase of up to $55 billion in terms of GWP by 2012, while the first-tier cities will have approximately 11 percent growth.

Ngai said that the broader array of distribution channels from the traditional sales force to bancassurance and telesales will also help to penetrate the products, pegged at 2 percent in 2007,

McKinsey forecasted that the first half of 2008, 40-50 percent of life insurance premiums were sold through banks, up from 25 percent in 2005,”

Chinese consumers held 71 percent of their financial assets as cash, down from 84 percent in 2002.

Insurers are facing several challenges under financial crisis, such as waning investor confidence, low profit from bancassurance, and rising competition from domestic predators.

At last, Ngai said that as competition upgrades, the ‘land-grab’ mindset among Chinese insurers will focus on profitability and value creation.

Are you interested in the business opportunities in China?

China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.

BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.

Please visit http://www.BPOVIA.com/ for details about our service.

Popularity: 3% [?]

China, economy, insurance, investment products, market