The Chinese insurance market: Estimating its long-term growth and size

Abstract

The mid-term and long-term growth potential of China's insurance industry is a subject of significant interest to governments, business and academia. In this paper, the world insurance growth curve is used in conjunction with estimates of China's future GDP growth to estimate the growth and size of China's insurance industry for the period 2006-2020. There are clearly other factors - social, political, cultural, demographic and market structure - that also have an impact, but other empirical studies have shown that the key factor in the long term is growth and development of the overall economy. Assuming that China's GDP grows over that period at a rate of 6-9 percent per year, we conclude that the possible range of China's insurance industry growth rate would be 7.7-17.9 percent, with a more likely range of 9.8-14.8 percent. In the median scenario, the average annual real growth rate for Chinas insurance industry during the period 2006-2020 would be 12.3 percent. Thus, by the year 2020, the size of Chinas insurance market would be 5.7 times of that of 2005, and the overall insurance penetration would be 5.6 percent, with 4 percent for life insurance and 1.6 percent for non-life insurance. The growth rate of Chinas insurance industry during the period 2006-2020 would be almost double the world average and by 2020, Chinas share of the world insurance market would be about 4.0 percent. © 2008 The International Association for the Study of Insurance Economics.