The Chinese insurance industry posted total gross premiums of CNY908.1bn ($128.2bn) in January 2020, a year-on-year increase of 6.84%, according to statistics released by the CBIRC.
Of the total, premium income in the P&C sector stood at CNY133.6bn, a year-on-year increase of 2.38%; whereas life insurance premium income was CNY774.5bn, a year-on-year increase of 7.64%.

Hit by the coronavirus outbreak which was then emerging, as well as the long Spring Festival holidays last January, these growth rates were a fraction of those seen in January 2019.

Chinese insurers saw their combined premium income grow at a double-digit rate in January 2019. Premium income totalled CNY850bn that month, soaring by 24% year on year. Premium income from property insurance increased by 13.9% to CNY130.5bn while life insurance business rose by 23.5% to CNY627.2bn in January 2019.

Health insurance grows fastest

In January 2020, in both the life and property insurance sectors, medical business grew fastest. Health insurance premiums generated in the life market was CNY94.1bn, a year-on-year increase of 17.92%. In property insurance, premium income from health insurance was CNY18.6bn, a year-on-year increase of 27.4%.

Securities firm Guotai Junan commented that the COVID-19 pandemic has raised residents’ awareness of disease prevention and health risks, and hence this will help stimulate demand for health insurance, with interest extending into the medium and long term.

This will be helpful for accelerating the narrowing of China’s protection gap. At present, the penetration rate of health insurance in China is only 0.71%, and the density is CNY504.7. Compared with developed countries and regions, the insurance gap is still large.

Agency force

Zhongtai Securities has published a report showing that March is the traditional agent recruitment month. Insurance companies accumulate a large number of prospective recruits through online marketing in the first two months of the year. The next major task is to guide these prospective agents into the business and retain them.

Various companies will soon launch products that are easy to sell online, aiming to activate distribution teams and expand the performance of agents. It is expected that the new business of various companies in March will be improved driven by the increase in personnel.

Pandemic will drive private car consumption

In property insurance, the gross premium income generated in motor insurance was CNY85bn in January 2020, creeping marginally upwards by 1.55% over the corresponding month last year.

Due to the pandemic, purchases of new cars have basically been postponed, which undoubtedly exerted pressure on auto insurance business.

According to data released by the China Association of Automobile Manufacturers, in the first two months of this year, the production and sales of automobiles were 2.048m and 2.238m, representing a plunge of 45.8% and 42% year-on-year respectively.

International consulting firm McKinsey said that the current state of the car market will inevitably affect auto insurance business. Yet, at the same time, the pandemic has made people desire private travel, which is expected to drive private car consumption in future.

McKinsey also says that in corporate-related insurance, the impact of the pandemic will further drive demand for public health liability insurance, SME business interruption loss insurance, event cancellation insurance and employer’s liability insurance.

Insurance fund utilisation

At the end of January 2020, insurance funds showed a balance of CNY18.85tn, while the industry’s total assets were CNY21.10tn, and net assets were CNY2.48tn.

At a media briefing by the State Council on the pandemic and the stability of financial markets, Mr Zhou Liang, a deputy chairman of the CBIRC, said that reform of insurance funds will be deepened, allowing those insurance companies with higher solvency ratios and better asset allocation to moderately increase the proportion of equity asset investment, and exceed the current 30% ceiling.

According to the data from the CBIRC, insurance companies have become the second largest long-term institutional investor category in China’s capital market. Insurers invested CNY2tn in stocks, accounting for 10.8% of total investable insurance funds.

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