China would allow more big foreign reinsurance firms into the country, aiming to boost market competition by attracting non-State capital into the sector, the insurance regulator said on Wednesday.
China's fledgling insurance industry has been expanding rapidly as Beijing dismantles a cradle-to-grave socialist welfare system.
But the reinsurance sector, starting from a weak base, is lagging far behind the development of the insurance sector and urgently needs to be strengthened, the China Insurance Regulatory Commission said in a report published on its Web site (www.circ.gov.cn).'
To that end, China will encourage non-state investors to branch into the reinsurance sector and bring in more big foreign reinsurers with expertise in health, agricultural as well as medicare insurance businesses, it said.
China now has one reinsurance group company that dominate the reinsurance market, while several foreign insurers such as Swiss Re, Munich Re and French reinsurer have set up branches in China.
In a move to boost the reinsurance sector, China injected $4 billion into China Reinsurance earlier this year to pave the way for the top reinsurer to bring in foreign strategic investors and eventually launch a public listing. ADVERTISEMENT
In 2006, China's reinsurance premiums came to 21.7 billion yuan ($2.87 billion), compared with insurance premiums of 564.14 billion yuan.
Moreover, reinsurance premiums have grown by an average of just 9.2 percent a year over the past decade, contrasting with that for insurance premiums of 12.8 percent.
By the end of 2006, the total assets of China's reinsurers reached 31.2 billion yuan, less than two percent of the total for the insurance industry.
The insurance regulator said that China aims to double its 2005 insurance premiums by 2010 to 1 trillion yuan, and it aims to expand its reinsurance premiums to 66 billion yuan by the same year.