A man passes by the billboard of New China Life Insurance Co at an insurance fair in Beijing. [Photo/A Qing, China Daily] Zhang Fanyi, a 35-year-old primary school teacher in Shanghai and mother of a five-year-old boy and an infant, recently spent 23,000 yuan ($3,480) on insurance policies for her family. The investment was triggered by an incident. "One of my mother's close friends fell sick and she could barely afford the treatment, From then on, I was thinking about insurance. Also, as my children grow up, we'll travel frequently, so insurance is necessary," said Zhang. She is one of millions of Chinese who are spending more than ever on insurance these days. With aging people marking the society, healthcare, education and asset-building have become important; so have life and non-life insurance products, said analysts. A research note from Northeast Securities said internet-based distribution channels enable insurance buyers to obtain more information about the products they would like to buy, and consumers have more trust now. Demand for life insurance has surged among families with aging parents and young children. At the same time, upgraded consumption, rise in disposable incomes and mounting wealth have also pushed up demand for non-life insurance. The fast-expanding insurance market has attracted not only more consumers but investors. About 200 companies have expressed interest or sought license to set up an insurance company, according to data of the China Insurance Regulatory Commission. In the last year, more than 10 companies have been given approval to obtain insurer's license. These 10 are backed by more than 70 companies, including Tencent, the Shenzhen-based technology giant, and Fosun, a Shanghai-based investment group. More than 200 applicants are keen to apply for license, according to Xiang Junbo, chairman of the CIRC. From garment makers to liquor firms, various enterprises are backing new insurers. "Profits of insurers are much higher than that in many sectors. Getting an insurer license is like securing a guaranteed profit. An insurer can raise funds easily by selling insurance at a cost much lower than many other fundraising channels. It is not a secret that an insurance company serves like a deep pocket from which companies can easily draw funds," said Yang Di, researcher with Shanghai Shenda Asset Management Ltd. According to CIRC data, total assets of China's insurance industry have more than doubled from 5 trillion yuan in 2010 to 12 trillion yuan in 2015. In the first half of 2016, life insurers' premiums reached 1.176 trillion yuan, up 50 percent year-on-year, and property insurers' premium reached 463.2 billion yuan, up 8.5 percent. Overall premiums grew 37 percent year-on-year. But authorities have warned that overly fast growth of insurers' income should not tempt companies to misuse the funds or deploy them in unrelated channels. In a recent meeting, CIRC's Xiang said insurers must stick to their original plan of providing protection to insurance buyers and should not divert funds to non-insurance businesses. He said insurer licenses are not tools to access low-cost funds. The entry of new insurers is expected to intensify competition in the market and sharpen focus on product development and solvency capacity management, said analysts. Ding Wentao, a researcher with Sinolink Securities Ltd, said, "We estimate that the fast growth of premium income will last for another decade. Internet-based sales channels, and growing number of niche markets will provide more opportunities for the newcomers than ever. Insurers that develop products for specific needs of buyers, and have a strong capacity to manage risks and solvency, are more likely to win."
Demand for insurance in China has surged, stimulated by the rise in disposable incomes, consumer trust, accessibility of information online and changing demographics. The number of people with health coverage rose to about 100 million last year, up from 80 million a year earlier, according to official data. In H1 2016 life insurers' premiums rose 50% YoY to CNY1.18tn and overall premiums grew 37% YoY. While high profits have led over 200 companies to express interest in licences, authorities have warned companies against deploying insurance income in unrelated businesses. Sinolink Securities predicts premium income will continue to grow rapidly for another decade.