The insurance density of China in 2005 was USD 47 and the insurance depth was 2.7%, accounting for less than half of the average value in Asia (excluding Japanese), while the average per capita GDP of the two were both around USD 1800. From the experiences of America, when the GDP per capita reaches USD 2000, the proportion of service expenditure and growth rate of life insurance consumption will take on a significant increasing trend. The assets of China insurance industry only account for less than 4% of the financial assets while the international average level at around 15%, the current development of China insurance industry is at the S-curve rapid growing stage. Life insurance premium increased from RMB 128.8 billion to RMB 324.4 billion during 2001-2005 with the annual growth rate of 26%. During the Jan.-Oct. of 2006, the life insurance premium in China was RMB 338 billion.
China life insurance premium, 2001-2006
At present, nearly 90% of the financial assets of residents in China deposit in banks, the proportion of purchasing life insurance is less than 6% while the proportions in other countries and regions are all above 12%. It is forecast that the medium income family will increase to nearly 200 million families in China till 2015 with the annual income growth rate of above 20%, and thus establish powerful purchasing foundation for the rapid growth of future life insurance consumption.
Along with the complete open of regions and products to the foreign-funded life insurance enterprises at the end of 2004, foreign-funded life insurance enterprises accelerated the layout in advanced cities in China, and the influences of foreign-funded life insurance enterprises on China market are now emerging with the market share in 2004, 2005 and first nine month of.2006 at 2.64%, 8.9% (including the big bills of Zhongyi) and 5.1% respectively, In the Shanghai and Shenzhen markets opened previously, the market share achieved 20% and 14% respectively. With their advanced product developing experiences and management capacity, foreign-funded life insurance enterprises are apt to sell long-term indemnificatory policies to top clients, and the business indexes of surrender rate and standard premium conversion rate and so on are still maintained at a rather good level.
But because of the big scale economics in administration expenses, for example, the administration expenses rate of China Life Insurance is only 14%, which is 10 percentages lower than Asia Life Insurance Company, so the low cost competitive advantages of the first movers are difficult for the late comers to surpass in short period. Recently, the expected interest rate of life insurance enterprises in China is restricted to less than 2.5%, the inherent disadvantages of small insurance enterprises on expense rate and the lacking of apparent advantages on investment make it difficult for small size insurance enterprises (including foreign funded life insurance enterprises) to shake the competitive position of the leading enterprises of the industry.
According to expectation, China is now in the golden stage of "demographic dividend", the population burden coefficient will reach the lowest level in 2010, and the economically active population will achieve the maximum in 2015 of about 1 billion. The total population burden coefficient of 2020 will be 43.5%, about 2.6% higher than that in 2005 and is mainly caused by the accelerated growth of aged population burden coefficient (the annual growth rate increased from less than 0.3% to 1%), the insurance compensation payment will enter the peak period, and the growth rate of life insurance will slow down.
Population aging has become a common demographic phenomenon globally, the occident countries entered the aging society gradually while the GDP per capital surpassing USD 10 thousand, but China entered the aging society too early without completing the accumulation process, "getting old before getting rich" is a particular characteristics of China population aging, thus China life insurance market needs an over-conventional development stage before 2015, and the emerging policies supporting insurance industry in “Eleventh Five-Year Plan” period is also from this consideration, the best opportunities in the future ten years' demographic dividend period are fleeting, and life insurance industry needs to grasp the turning point.