The Chinese Insurance Market: Estimating its Long-Term Growth and Size

The mid-term and long-term growth potential of China’s insurance industry is a subject ofsignificant interest to governments, business and academia. In this paper, the ‘‘worldinsurance growth curve’’ is used in conjunction with estimates of China’s future GDPgrowth 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 marketstructure – that also have an impact, but other empirical studies have shown that the keyfactor in the long term is growth and development of the overall economy. Assuming thatChina’s GDP grows over that period at a rate of 6–9 percent per year, we conclude that thepossible range of China’s insurance industry growth rate would be 7.7–17.9 percent, with amore likely range of 9.8–14.8 percent. In the median scenario, the average annual realgrowth rate for China’s insurance industry during the period 2006–2020 would be 12.3percent. Thus, by the year 2020, the size of China’s insurance market would be 5.7 times ofthat of 2005, and the overall insurance penetration would be 5.6 percent, with 4 percent forlife insurance and 1.6 percent for non-life insurance. The growth rate of China’s insuranceindustry during the period 2006–2020 would be almost double the world average and by2020, China’s share of the world insurance market would be about 4.0 percent....