BMI's Executive Summary for the China Insurance Report

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This report is substantially different from its predecessor. For virtually all countries considered by BMI, including many for which we do not regularly produce reports on the insurance sector, 2008 reports include hard data – derived from official sources – to the end of 2006. They incorporate forecasts as far as 2012. To a much greater extent than was previously the case, we have incorporated details of the various lines that comprise the non-life segment. Most importantly, we have introduced the new Insurance Business Environment Rating. The IBER combines our assessment of the insurance sector – which is based predominantly on quantitative data – with BMI's proprietary Country Risk Rating (CRR). The details are given in the methodology section at the end of this report.

The result is that it is now much easier to consider the business environment for the insurance sector in any one country relative to the business environment for other industries in that country that are considered by BMI, and the business environment for the insurance sector in other countries.China's IBER is 61.7. Relative to other countries in the Asia Pacific region, it is a moderately attractive insurancemarket for foreign insurers. China stands out in the region for the present absolute size of and likely absolute growth in both annual life and non-life premiums. The ratings for both the non-life and the life segments are undermined by their lack of openness to foreign participants. The other factor that boosts China's IBER is its relatively high Country Risk Factor. China's continued growth and the political environment are such that scores for financial and external stability are high, as is the score for policy continuity over the long-term. These factors outweigh the major deficiencies in the legal framework and bureaucracy. China's IBER is also held back by the very small rate of non-life penetration, the tax regime, low GDP per capita, and past GDP volatility.

Over the forecast period, to 2012, we anticipate that non-life premiums will grow by 11% annually in local currency terms and by 16% in US dollar terms. Life premiums are expected to increase by 8% annually in local currency terms and by 13% in US dollar terms. The key drivers of growth in the non-life segment in 2007-2012 are the anticipated rise in nominal GDP from around US$3,221.56bn in 2007 to US$7,696.01bn in 2012, and an expected increase in non-life penetration from 1.00% of GDP to 1.10% over the same period. The key driver of growth in the life segment is the envisaged rise in total population from 1,331.36mn to 1,370.22mn in 2012. We predict that life density will actually decrease during this period from 1.72% to 1.67%.

China still scores quite poorly in terms of its measure of openness to foreign companies. However the size of its economy and likely continued growth make it a popular choice for both life and non life insurers. The legal framework and bureaucracy are cumbersome, but some recent regulatory innovations highlight the general trend towards modernization in this area.

Despite historically low GDP, which served to drag down China's IBER, real GDP data for Q307 has indicated that China remains on track to achieve its fastest annual expansion in 14 years. Even though year-on-year (y-o-y) growth of 11.5% y-o-y in Q307 was a slowdown from Q207's 11.9% expansion, a 12-year high, it will ensure that Chinese authorities retain their hawkish bias as they try to slow the pace of growth in the world's fourth largest economy.

Contents of the China Insurance Report

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Chapter 1 - The Sector At A Glance

Table: Overview

Key Features Of This Report & Likely Future Changes

Chapter 2 - Latest News

Recent Developments

Chapter 3 - Evolution Since The Mid-1990s

Table: Evolution Of The Insurance Sector (in millions of currency specified)

Evolution

Chapter 4 - Projections And Forecasts

Table: BMI Projections (in millions of currency specified)

Projections And Drivers Of Growth

Chapter 5 - Macroeconomic Outlook

Table: China Macroeconomic Data And Forecast

Chapter 6 - Country Update

Political Risk Renewed Calls For Sanctions

Economic Risk Fuel Prices Hiked Again

Business Environment A Vote Of Confidence in Chinese Economy

Chapter 7 - Analysis of Competitive Conditions

Table: Non-Life Segment Rankings of Markets

Table: Presence Of Cross-Border Insurers Non-Life

Table: Selected Local Non-Life Insurers

Table: Life Segment Rankings of Markets

Table: Presence Of Cross-Border Insurers Life

Table: Selected Local Life Insurers

Whos who in the Asia-Pacific region?

Chapter 8 - Regional Context

Table: Regional Context Premiums

Table: Regional Context Total Premiums

Methodology And Objectives

Introduction

Background

Forecasts

Appendix

Table: Latest Estimates / Actual Figures For 2005

Table: Latest Estimates For 2010

Table: Latest Estimates For 2005-2010

Competitive Landscape for Asia Insurance Reports: Sample of
    Companies Ranked

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A cross-border overview of key players and their insurance market share across Asia. Tables and graphs show country presence of multinationals across the region. Comparative company analyses and rankings by premium income (life and non-life). Company SWOTS for leading life and non-life insurers, covering network of offices, presence of foreign stakeholders, strategic relationships, joint ventures; portfolio of clients; diversity of product range; profit growth, investment strategy and risk exposure.

Network of Insurance Sources

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BMI's Asian Insurance Reports are based on an extensive network of multilateral organisations, government departments, insurance industry associations, chambers of commerce and company reports. Information sources include:

Read about our other Insurance Reports