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RIO DE JANEIRO—The Chinese insurance industry has seen rapid expansion during the past 20 years and will see continued high growth rates for the next several decades, one of the country's top regulators said Wednesday.
As the market evolves, the Chinese regulatory framework also will be updated to reflect the changes, said Yanli Zhou, vice chairman of the China Insurance Regulatory Commission. He made his comments Wednesday at the International Insurance Society Seminar in Rio de Janeiro.
Since 1992, when China began moving toward a market economy, the country's insurance market has transformed, Mr. Zhousaid. The changes have been particularly rapid in the past 10 years, he said.
In 2002 there were five insurers operating in China and the largest insurer, the People's Insurance Co. of China, had a 96% market share. Today there are 134 insurers and reinsurers operating in China and, on the property/casualty side, PICC has a 36% share, he said.
Total premium income of the market has grown from 36.8 billion yuan ($5.78 billion) in 1992 to 1.4 trillion ($219.8 billion) yuan in 2011.
The market will continue to grow, Mr. Zhou said. Macroeconomic factors and China's industrial growth will increase demand for insurance, the growing middle class and other demographic changes also will drive growth, he said.
For example, the urbanization ratio in China exceeded 50% for the first time in 2011 and it is expected to grow to 80% by 2030, which will drive demand for more personal insurance. In addition, there will be 430 million people in China older than 60 by 2050, which will drive demand for pension products.
There also is also huge potential for growth of catastrophe coverage as only 5% of natural disaster losses are currently covered by insurance, Mr. Zhou said.
“We think the China insurance industry will have very good prospects in the years to come,” he said.
And as the market grows, more regulatory changes will be implemented, Mr. Zhou said.
Last year, China implemented regulations to provide greater consumer protection and opened a hotline for consumer complaints in April this year. Later this year, it will set up a network of dispute resolution centers, he said.
By 2016, CIRC will complete its update of solvency regulations. The updated regulations will be based on qualitative factors, quantitative factors and transparency, Mr. Zhou said.
“The new solvency (regulations) will reflect the international realities of the Chinese insurance industry,” he said.
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SHANGHAI (Reuters)—China's insurance regulator will allow insurers to invest in a wider range of corporate bonds and relax limits on equity and real estate investment, granting them greater freedom to seek higher returns and play a stronger role in the financial system.