life insurance industry market share
Dollars more than $ 20 billion of destruction was the result of the most damaging earthquake in China since 1950, unearthing the realization that the industry insurance in the nation is years behind the world's largest economies.
An official of the China Insurance Regulatory Commission, which declined to be identified said that only 5% of the cost of the overwhelming majority of damage in Sichuan Province was covered by insurance.
When compared with the U.S., and its handling of Hurricane Katrina, the costliest storm in its history, which was insured by the companies and the federal government, resulting in about 50% of damages 120 billion U.S. dollars are covered, there is something obviously wrong in China.
“ The earthquake underscores how insurers have much space to penetrate into rural China,''said Zhang Ling, who oversees $ 1.1 billion for ICBC Credit Suisse Asset Management Co. in Beijing and holds Ping An Insurance (Group) Co. shares. “ There will be a lot more momentum and support to government after natural disasters this year.''
Even the nations largest insurance companies, China Life Insurance Co. and Ping An failed to expand throughout China. According to statistics found by KPMG International, a nation of 1.3 million people, only 4% have insurance. Again concern compared with the U.S., where 77% have some type of life insurance.
The quake, measuring magnitude 7.9, has made about half of the 20 million people living in Sichuan, destroying their houses and buildings, leaving 30, 000 people remain under the rubble, and with a balance of about 20, 000.
“ If a disaster like this happened in Europe or the U.S., the situation appropriations would be very different,''said Michael Spranger, a Hong Kong-based earthquake analyst at Munich Re, No. 2 reinsurer in the world after Swiss Re “ The coverage rates are very low natural disasters throughout Asia, in the single digits.''
The chief economist at Swiss Re in Asia in Hong Kong, Clarence Wong has stated that the Niigata earthquake, which struck central Japan last July, resulted in a $ 3 billion, 10% of losses they are insured.
The earthquake in China happened 4 months after the country's most powerful snowstorms in 50 years, so damaging that 1 million citizens had to evacuate.
This means that insurers are becoming much more competitive when it comes to finding sales in rural areas, their salaries in danger of extinction for years was reduced by 26% in China's benchmark CSI 300 Index threatens earnings growth.
China Company Life has had an overall profit drop of 61% in the first quarter, with Ping An increased its slowest performance since the opening.
“ The earthquake is not expected that have a material impact''on the balance sheets of China's insurers, wrote Hong Kong-based Fitch Ratings analysts Stanley Tsai and Jeffrey Liew in a report 15 May. “ That said, the losses from the tragedy, along with the poor performance of the A-share market in early 2008, will put pressure on insurers' earnings for the year.''
It is now clear that getting the rural and natural disaster insurance is a concern best paramount to the Chinese government. The industry regulator official in Beijing believe that China may be planning the creation of a system of insurance against natural disasters, which would be paid by the government and private sector participation.
Swiss Re, based Zurich announced that the insurance penetration in China, a As premiums as a percentage of gross domestic product, which turned out to be around 2.9% last year, reaching 49 in world rankings
“ Penetration Earthquake insurance is usually very low, and for residential covers practically nonexistent,''said Peter Zimmerli, senior vice president of Swiss property Re in Asia and the group of victims.
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Article Source: ArticlesBase.com – Earthquake in China Reveals Archaic Life Insurance Schemes
