Market Research Report : Life Insurance Market in China 2012


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Life Insurance market in China is poised to witness robust growth through 2015.

The report begins with a brief description of the global life insurance market including the growth rate of the global life insurance sector along with a projected ranking of the top six life insurance markets globally. Further, the report covers a brief description of the life insurance market in China including the rate of market growth and the various segments of the life insurance market. A detailed time line description of the impact of liberalization on the life insurance market in China is also included in the report. The report also includes a detailed description of the various distribution channels operating in the life insurance market in China.

Key drivers explain the factors influencing the growth of the life insurance market in China in detail. Some of the drivers identified include rise in middle class and increasing income, rise in ageing population, low market penetration and impact of liberalization. While major challenges facing the industry that impedes the development and growth of the life insurance market in China includes location challenge, recession in developed markets, complex market regulations and lack of human resource.

Government initiatives section includes the measures adopted under the 12th Five Year Plan to develop the life insurance market in China. The section highlights the measures adopted by the life insurance industry measures as laid by the China Insurance Regulatory Commission (CIRC), the new regulations governing the life insurance market and investment regulations pertaining to the life insurance market in China.

Emerging trends of the sector include the IPO pipeline, mergers and joint ventures, rise in bancassurance channel of insurance and product innovation.

The report also contains a brief analysis of the competitive landscape of the life insurance market in China. This section provides a three dimensional analysis of the key players’ revenues, profits and market capitalization. The report also features brief profiles of the major domestic and foreign players operating in the market with a snapshot of their corporation, financial performance, and business highlights thus providing an insight into the existing competitive scenario.

Key takeaway section summarizes the entire market in terms of opportunities, challenges and government initiatives persisting in the life insurance market in China.

Key statistical figures relevant to the study include global life insurance market size and growth rate, life insurance market size by premiums collected (2005-2015e), key segments. Claims paid and premiums earned, share of Chinese urban household, per capita urban household income, life expectancy, ageing population of China, market penetration etc.

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Market Research Report : Life Insurance Market in China 2012

  1. 1. Life Insurance Market – ChinaJanuary 2012
  2. 2. Executive Summary  Life Insurance market is the fastest growing segment of the insurance industry in China Market  A handful of domestic players dominate the insurance industry in China  Foreign firms are stepping in the market primarily through joint ventures and mergers Drivers: Challenges: • Rise in Middle Class and Increasing  • Location Challenge Drivers & Challenges Income • Rise in Ageing Population • • LE   Recession in Developed Markets Complex Market Regulations P • Low Market Penetration • Lack of Human Resource • Impact of LiberalizationGovernment  Initiatives  12th five year plan  CIRC Measures S AM  Life Insurance Market Regulations  IPO pipeline  JV and M&A Landscape Trends  Rise in Bancassurance  Product Innovation Major PlayersCompetition Company 1 Company 2 Company 3 Company 4  LIFE INSURANCE MARKET IN CHINA 2012.PPT 2
  3. 3. •Market Overview • Global Market Scenario   • Domestic Market Scenario LE P•Distribution Channels M S A•Drivers & Challenges•Government Initiatives•Trends•Competition•Key Takeaway LIFE INSURANCE MARKET IN CHINA 2012.PPT 3
  4. 4. Life insurance is one of the fastest growing segments of the  insurance sector in the worlds Global Life Insurance Market ‐ Overview Global Life Insurance Premium – Growth Rate • Global life insurance market grew by x% from 20‐‐ to  USD bn X% Y bn in 20‐‐ 3,000 x1 x2 2,500 • Share of life insurance premium was a% of the total    2,000 LE insurance premium collected in 20‐ ‐ 1,500 • USA ranked x in terms of life insurance premium  1,000 volume in 20‐‐ and is expected to rank y in 20‐‐ • China currently holds the y position and is expected  MP 500 0 Year 1 Year 2 ‐ S A to emerge as the z global life insurance market by 20‐ • Global life insurance market is expected to be highly  concentrated in n years time  Global Life Insurance Markets – Ranking Countries 20‐‐ 20‐‐ • The top emerging market countries to dominate the  USA a1 b1 global life insurance market by 20‐‐ are A, B, C, D and  China a2 b2 E Japan a3 b3 • These countries are expected to have a x% share of  France  a4 b4 the life insurance industry of the emerging markets UK a5 b5 India a6 b6Source: Note: Emerging Markets refers to an economy with low  level of per capita income LIFE INSURANCE MARKET IN CHINA 2012.PPT 4
  5. 5. Life insurance market in China is expected to witness a rapid  growth Domestic Life Insurance Market ‐ Overview Life Insurance Premium – Growth Rate • Insurance market in China has evolved into a large  USD bn and rapidly growing industry over the years 600 y4 500   • Life insurance is the largest segment by premiums  Y% 400 LE collected of the insurance industry in China  300 y3 200 y2  Life insurance market is projected to grow to USD x bn in  20‐‐ from USD y bn in 20‐‐ • Domestic firms dominate the life insurance market in  MP 100 0 y1 Year 1 Year 2 Year 3 Year 4 China • Rising competition by the foreign firms is a key  feature of the life insurance market S A Life Insurance – Market Segments (2010) % Claims paid Premium earned • The life insurance market in China is dominated by a  100% a1 a2 a3 large number of institutional regulations 80% 60% • Ratio of the claims paid to the premiums earned is  b1 40% b2 b3 lowest for the A  segment compared to the B and C  20% segments 0% A B CSource: LIFE INSURANCE MARKET IN CHINA 2012.PPT 5
  6. 6. Life insurance market in China is divided into three major segmentsDomestic Life Insurance Market ‐ Segmentation• Life insurance market in China is divided into three  Share of Insurance Premiums (20‐‐) segments  X1  X2 X1   D%  X3 X2 LE• Life insurance market in China accounts for x % of the  X3 C% P total premiums of the overall insurance market  B% X4 A%• Share of X1 premium is the highest at y% of total  premiums collected S AM Market Structure Insurance A B B1 B2 B3Source: LIFE INSURANCE MARKET IN CHINA 2012.PPT 6
  7. 7. Liberalization of the insurance market in China played a  major role in driving the market growth • Aaa • Bbb Year a Year b Year c Year d Year e Year f • Ccc • Ddd • Eee • Fff • Ggg • HhhSource: LIFE INSURANCE MARKET IN CHINA 2012.PPT 7
  8. 8. Drivers & Challenges – Summary LE   Challenges Location Challenge Drivers MP Recession in Developed Markets A Rise in Middle Class and Increasing  S Income Complex Market Regulations Rise in Ageing Population Lack of Human Resource Low Market Penetration  Impact of Liberalization LIFE INSURANCE MARKET IN CHINA 2012.PPT 8
  9. 9. Rise in middle class population coupled with a rise in  disposable income drives the life insurance market Rise in Middle Class and Increasing Income Impact •Finding 1 •Finding 2 •Finding 3 LE   MP Share of Chinese Urban Households a b c d e S A Per Capita Urban Disposable Income USD Y% 2,000 100 b1 c1 a1 x2 b2 a2 a3 a4 x1 80 d1 b3 1,500 c2 b4 60 d2 c3 1,000 40 e1 c4 e2 d3 500 20 d4 e3 e4 0 0 Year 1 Year 2 Year 3 Year 4 Year 1 Year 2Source: LIFE INSURANCE MARKET IN CHINA 2012.PPT 9
  10. 10. Rapid rise in the share of ageing population provides a  golden opportunity for market growth Rise in Ageing Population  Impact • Finding 1 • Finding 2 • Finding 3 • Finding 4 LE   MP Rise in Life‐Expectancy Aaa S A Share of 80+ group (2010) A B Growth of Ageing Population (60+) % A% 20 a3 B% a2 Years X% 15 a1 80 x3 x1 x2 10 60 40 5 20 A% 0 0 Year 1 Year 2 Year 3 Year 1 Year 2 Year 3Source: LIFE INSURANCE MARKET IN CHINA 2012.PPT 10
  11. 11. Low penetration level of the life insurance market presents  a greater opportunity for growth Low Market Penetration Impact • Finding 1 • Finding 2   • Finding 3 P LE Penetration Rate S AM China ‐ Regional Penetration % % 20 4 x1 a1 15 3 b1 x2 10 c1 2 x3 5 d1 1 0 0 A B C D X1 X2 X3Source: Note: LIFE INSURANCE MARKET IN CHINA 2012.PPT 11
  12. 12. Liberalization of the economy acts as a major driver of the  life insurance market Impact of Liberalisation Impact •Finding 1 •Finding 2 •Finding 3 •Finding 4 LE   MP % A B S A Competition Mix – Key Regions Competition Structure (2010) 100% 1 4 a1 a2 80% 2 5 a6 a1 3 6 60% 40% b1 b2 20% a5 0% a4 a2 X Y a3Source: LIFE INSURANCE MARKET IN CHINA 2012.PPT 12
  13. 13. Summary – Trends  IPO Pipeline LE   JV and M&A Landscape MP A Trends S  LE Product Innovation Rise in Bancassurance MP S A LIFE INSURANCE MARKET IN CHINA 2012.PPT 13
  14. 14. Domestic Competition – Summary (1/2) Net Income Size of the Bubble represents Market Capitalization in USD mn 6,500 6,000 5,500 a1   5,000 LE 4,500 P 4,000 3,500 3,000 2,500 2,000 1,500 S AM c1 b1 1,000 500 0 Revenue 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 A B CSource: Note: LIFE INSURANCE MARKET IN CHINA 2012.PPT 14
  15. 15. Domestic Competition – Summary (2/2) Revenue and Profit for Major Domestic Companies  0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 USD mn A LE   a1 P a2 B b2 S AM b1 c1 C c2 X Y Note:Source: LIFE INSURANCE MARKET IN CHINA 2012.PPT 15
  16. 16. Major Domestic Players in the Market (1/7) Company Snapshot: Company 1 Corporate Information Financial Performance Headquarters City 1, Country 1 Revenue Revenue Profit USD mn Profit / Loss USD mn    Founded 19‐‐ LE 80,000 8,000 x4 60,000 x3 6,000 x2 Products Product 1, Product 2, Product 3 Key People Name 1 –Designation 1 MP 40,000 20,000 x1 4,000 2,000 A 0 0 S Year 1 Year 2 Year 3 Year 4 Business Highlights • Company is a operating subsidiary of A • Total premium income of the company till Oct 20‐‐ amounted to USDx bn • After approval from the CIRC issuance of USDy bn subordinated debt was completed by the company in Oct 20‐‐  Maturity period of the subordinated debt is fixed at a years with an interest rate of b% for the first c years  Proceeds from the issuance will be used to raise solvency ratio and raise supplementary capital of the company • In May 20‐‐ company completed the filing of record for private equity and investment in real estate with the CIRC • Till Dec 20‐‐ company had three subsidiaries that engaged in a1, a2 and a3Source: LIFE INSURANCE MARKET IN CHINA 2012.PPT 16
  17. 17. Despite a large number of institutional restrictions life insurance market in China is poised to witness rapid growth Life Insurance Market in China is expected to grow by A% to USD X bn by 20‐‐ Opportunities in the  Government  Market Size Market Initiatives USD bn Rise in middle class  population along with  600 400 A% LE   a4 12th five year plan of  the government  P rise in disposable income  a3 focuses on measures  200 a2 provides a major  to develop the life  M a1 opportunity for growth insurance sector  A 0 China Insurance  S Year 1 Year 2 Year 3 Year 4 Low market penetration  Regulatory  level coupled with a  Commission has rising share of ageing  also adopted several  population propels the  measures to boost  life insurance market in  Challenges the market China  • Location Challenge Life insurance  Entry of firms through  • Recession in Developed Markets market in China is  joint ventures and  dominated by  • Complex Market Regulations restrictive  mergers is a major driver  of the life insurance  • Lack of Human Resource investment  market regulations LIFE INSURANCE MARKET IN CHINA 2012.PPT 17
  18. 18. Thank you for the attentionLife Insurance Market ‐ China report is a part of Netscribes’ Financial Services Industry Series. For more detailed information or customized research requirements please contact: Jitendra Punjabi Phone: +91 33 4064 6215 E‐Mail: jitendra.punjabi@netscribes.comAbout NetscribesNetscribes is a knowledge‐consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content‐management services, and knowledge‐software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one‐stop shop designed to fulfil clients’ profitability and growth objectives.Disclaimer: This report is published for general information only. Although high standards have been used the preparation, Research on India, Netscribes (India) Pvt. Ltd. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes (India) Pvt. Ltd. and prior permission is required for guidelines on reproduction. LIFE INSURANCE MARKET IN CHINA 2012.PPT 18