1. ^aSchool of Economics, Peking University, Beijing 100871, P.R. China. E-mail: weizhengpku@yeah.net
2. ^bCenter for Chinese Agricultural Policy, Institute of Geographical Sciences and Natural Resources, Chinese Academy of Sciences, Beijing 100101, P.R. China
3. ^cCass Business School, City University, London, 106 Bunhill Row, London EC1Y 8TZ, UK. E-mail: gerry@franetwork.com

^*This article was presented at "Beida CCISSR Forum 2006", "CCISSR Biweekly Seminar", "PKU Economics Lunch Seminar" and "APRIA 2006" (Tokyo Japan). The participants' comments are appreciated; in particular, we benefited from Professor Qixiang Sun, Professor Xinyu Li, Professor Zhiwei Wang, Professor Shaorong Li, Dr. Dong Chen, Dr. Zhiyong Dong and Dr. Qingjie Xia. We would like to give special thanks to Dr. Rudolf Enz for his valuable correspondence and communications, and Swiss Re (especially Mr. Clarence Wong) for providing research data. We also thank Ms. Yiting Deng for her help in proofreading and Dr. Derek Atkins for his helpful comments on the presentation.

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 China's insurance industry during the period 2006–2020 would be 12.3 percent. Thus, by the year 2020, the size of China's 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 China's insurance industry during the period 2006–2020 would be almost double the world average and by 2020, China's share of the world insurance market would be about 4.0 percent.