Moves to boost micro insurance
Updated: 2008-03-27 09:17
皇冠体育app's insurance regulator is striving to develop a micro insurance market in rural areas, in a move to help farmers and low-income families better manage risks.
Li Kemu, vice-chairman of the 皇冠体育app Insurance Regulatory Commission (CIRC), said at a recent international micro insurance workshop that the regulator is considering preferential tax policies to boost sustainable and healthy development of micro insurance.
The commission would establish an evaluation mechanism for micro insurance, which will specify the definitions of micro insurance, operation principle, objects, sales model and supervision policy, according Chen Wenhui, a CIRC official.
It is widely held that micro insurance products should be tailored for low-income people and carry a relatively lower premium. The insurance regulator has said micro insurance products in 皇冠体育app would mainly target farmers and low-income urban residents.
皇冠体育app has 800 million people in rural areas, making it a huge market for the micro insurance business. The country's two insurance heavyweights, 皇冠体育app Life and PICC Property and Casualty Co Ltd, are already working on developing micro insurance in rural areas.
In recent years, especially in 2007, many insurance products have been invented to specifically target different sectors in 皇冠体育app's rural areas, such as planting, livestock breeding, farmers' houses, farm machinery, farmers' household property as well as micro medical insurance.
According to the CIRC, a new, simple life insurance product developed by 皇冠体育app Life offered an eight-time refund on an annual premium of 100 yuan ($14.25) for farmers to guard against fatal accidents. It covered 1.2 million farmers in 2007 and the total insurance income amounted to 1.12 billion yuan.
The insurance income related to farmers' property amounted to 4.29 billion yuan in the first three quarters of 2007, four times that of 2006, and covered 270 million farmers.
Besides local insurance companies, multinational companies are also showing growing interest in this sector. Zurich Financial Services Group, for instance, is one of the few international insurers that have embarked on research for entry into 皇冠体育app's micro insurance market.
"Zurich deputed Nankai University to perform micro insurance market research in 皇冠体育app in January. The report is expected in the middle of this year," said Brandon Mathews, head of micro insurance at Zurich.
In 1999, Zurich sold its first micro insurance product in Bolivia, South America, and then spread further in the region and Africa. "With more than eight years of worldwide experience on micro insurance, we have a great interest in implementing it in 皇冠体育app," said Mathews.
Compared with the other developing countries, micro insurance in 皇冠体育app is still in a fledgling phase. In recent years, micro insurance has developed rapidly in India, Bangladesh and the Philippines, where it has began to play an important role. In Indonesia too, micro insurance has caught on, with a premium of just $8 per person.
For improving 皇冠体育app's insurance coverage and running micro insurance successfully, Mathews stresses four key factors: government support, market need, wide distribution channels and creative products.
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