Insurers Saw Business Slow in 2012, Regulator Says
(Beijing) – The insurance regulator said business for insurers nationwide slowed significantly in 2012 and some may run out of cash this year.
The regulator revealed last year's data on January 24. It shows that a combined 1.55 trillion yuan of premiums was collected in 2012, an increase of only 8 percent from 2011.
That was the first single-digit growth rate since records started being kept, said Xiang Junbo, chairman of China Insurance Regulatory Commission. In comparison, over the last nearly two decades, collected premiums rose by on average more than 20 percent year on year, he said.
Data also shows that the total assets of all insurance companies stood at 7.35 trillion yuan at year's end, up nearly 23 percent from the beginning of 2012.
Insurance companies were losing customers to banks that offer higher interest on long-term deposits, Xiang said.
"The average yield on insurance products was lower than five-year bank deposits," so many insurers found themselves under pressure from clients wanting to cancel policies, he said.
That coincides with an expected surge in life insurance claims this year, meaning "some insurers may face liquidity shortage," he said.
Xiang blamed the slower growth rate partly on marketing restraints. Insurers have traditionally relied almost entirely on banks and post offices to sell products. Efforts to strengthen an independent sales force have met obstacles as salespersons do not often stay in the job, he said.
Also, property insurance products have been largely underdeveloped, with more than 70 percent of business in this sector coming from auto insurance, he said.
Xiang also outlined priorities for the upcoming year, including preventing systemic risk, enhancing customer protection, stepping up reforms and improving regulations.
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