China’s rural premiums could reach US$141bn by 2025: reportJuly 1 2020 by Yvonne Lau
With the Chinese government targeting zero poverty and greater investment in rural infrastructure, the Swiss Re Institute forecasts that “rural-emanating premiums” will increase 11% each year to reach over Rmb1 trillion (US$141.47 billion) by 2025.
The research arm of the Swiss reinsurer highlights “supportive government policy and digital penetration” as key drivers in powering strong gains in rural economic value.
“For insurers, the rural sector is a ‘blue ocean’ opportunity of untapped demand and still limited competition,” said the Institute’s recent report entitled ‘Rural Revitalisation in China.’
“Ongoing development of the rural economy will present many opportunities for insurers — especially in health, agriculture and motor. [Insurers] are already working with the government to provide tailored products for rural residents, agricultural production and property.”
Rural health insurance premiums are set to grow by 20% annually, and agriculture around 13% each year. Motor should grow by 11% annually and other P&C sectors by 22%.
By 2025, rural P&C premiums are forecasted to reach Rmb529 billion (US$74.8 billion), making up 23% of the country’s total P&C market; while rural L&H premiums could increase to Rmb480 billion (US$67.9 billion).
Despite the China’s rapid modernisation and urbanisation efforts, 40% of the country’s population still remains in rural areas. The average disposable income in 2019 for the rural population was Rmb16,000 (US$2,263) — an almost 10% increase from 2018, says Swiss Re.
Rural consumption on average and per capita also grew by 10% from 2018. “An increase at current rates will power strong rural consumer and infrastructure demand over the next few years,” noted the report.
Since early June, China has been grappling with a deluge of heavy rainfall leading to severe flooding across 26 provinces. Lytton Li, managing director, China at loss adjuster McLarens, told InsuranceAsia News (IAN) that agriculture was significantly impacted.
Direct economic losses have now reached Rmb27.8 billion (US$3.9 billion), says the Ministry for Emergency Management.
Floods pose a high risk to China every summer — inflicting damage on property, agriculture and human lives. But the penetration rate for flood insurance is still significantly low.
Meanwhile in India, Swiss Re in partnership with Mumbai’s Tata AIG, recently signed an agreement with the Indian government — outlining a parametric insurance programme that will provide protection for India’s monsoon season that often sees severe rainfall and flooding.
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