China’s insurance sector will enjoy policy support by 2020. That’s after the State Council issued new policy guidance Tuesday to accelerate the development of modern insurance services in China. CCTV spoke to Wang Zuji, the vice chairman of China’s top insurance market regulator, about what the policy guidance means to the industry and investors.
The new policy guidance concerning China’s insurance market is the second to be issued in eight years.
The guidance comes as the State Council eyes the sector as a way to provide a foundation of risk management for the economy.
Some specific policy targets in the guidance by 2020 include increasing the penetration rate of insurance services to 5 percent, up from 3 percent in 2014, with the average insurance premium of 3500 yuan per person. That’s a challenging 15.6 percent growth from the current level of slightly more than 1200 yuan per person.
The State Council says commercial insurance providers will become the primary undertaker of individual and household programs and an important supplier of corporate pensions and health insurance.
Insurance also will be given a larger role in the prevention and relief of disasters and accidents through the introduction of catastrophe insurance products. But the effort needs policy and legal foundations.
“We must acknowledge that it is a complicated process in building the insurance catastrophe system. In this process, relevant laws must be enacted and funding is also important.” Wang Zuji, Vice Chairman of China Insurance Regulatory Commission.
Meanwhile, the government will continue its house-for-pension insurance experiment. To protect consumers,the government will also launch a pilot program to introduce compulsory insurance for environmental pollution, food safety, medical accidents, and campus safety.
However, the policy guidance was not much of a market mover on Thursday. China pacific insurance only inched up, while PingAn insurance , China Life, and New China Insurance all saw their share prices slip.
China’s insurance industry had total assets of 9.4 trillion yuan as of the end of June. China-based Dagong Global Credit Rating says the Chinese insurance market is set to expand about 15 percent in 2014-2015, with health and non-life sectors expanding faster than life insurance.