1. ^aDepartment of Risk Management and Insurance, School of Economics, Peking University, Beijing, China.
2. ^bChina Centre for Insurance and Social Security Research (CCISSR), Peking University, Beijing 100871, China.
3. ^cCentre for Chinese Agricultural Policy, Chinese Academy of Sciences, Beijing 100101, China.
4. ^dChina Centre for Economic Research (CCER), Peking University, Beijing 100871, China.

^*A former version of this paper was awarded the "Shin Research Excellence Award" (2008) by The Geneva Association and the International Insurance Society (IIS), presented at the IIS 44th annual conference in Taipei in July 2008. We would like to thank The Geneva Association, IIS and Shin Fund, as well as the anonymous referees and judging committee for their valuable comments and advice. We are also grateful to Professor Gerry Dickinson from City University (U.K.), Professor Sun Qixiang from Peking University (China), Professor Yu Tong from University of Rhode Island (U.S.) and Professor Zou Hong from City University of Hong Kong for their helpful comments and suggestions. We thank Swiss Re (especially Mr. Clarence Wong) for data support and thank Prof. William Rabel from University of Alabama (U.S.) for his kind help in correcting. The usual disclaimer applies.

Abstract

By proposing the Benchmark Ratio of Insurance Penetration (BRIP) as a new paradigm for international insurance comparison, this paper makes a new assessment and comparison of insurance growth levels of certain countries as well as certain economic groups, and further discusses the policy implications. The main conclusions of this paper are as follows. First, it is necessary to have a new recognition of the international insurance growth pattern: the relative level of insurance growth in developed markets has declined as compared with that indicated by traditional indicators, and the relative level of insurance growth in developing markets has increased. The relative growth level of the insurance industry in developed markets is still higher than that in developing markets, but the insurance industry in emerging markets and Brazil, Russia, India and China (BRIC) is undergoing rapid development and has achieved a relatively high level. Second, when considering global expansion strategy, insurance companies should not only continue to consolidate market share in developed markets but also actively explore developing markets. In the meantime, insurance companies need to pay special attention to the fact that the relative insurance growth of emerging markets and BRIC has already reached a relatively high level. Although there is still significant potential for growth, the growth will mainly be driven by the ordinary economic factors, and the pattern of insurance growth would be expected to experience great changes. Third, the insurance industry policy for developing countries should focus on the adjustment and improvement of the pattern of growth instead of the quantitative increase in growth, so as to build a solid foundation for sustainable insurance growth in the long-term future. Fourth, the traditional paradigms are confined by certain limitations, so that we have to establish a more solid paradigm for international insurance comparison. By doing so, we can build a more reasonable foundation for international cooperation in insurance regulation and for relevant negotiation of international trade.