Insurance Sector
Historically, the Chinese government and its large state-owned enterprises have supplied the population with means of social security such as health care and pensions. With the economic opening, the reforming of the state-owned enterprises, and the growth of the private sector, these financial burdens increasingly lie in the hands of each citizen. Currently, the insurance market is growing at a very high rate. Since 2002, the annual average premium growth has been 17.3%. Despite this fast growth, the market penetration rate still lies below 3%, very low in international comparison. The insurance market is still small in relation to the country’s overall GDP.
The knowledge and awareness of insurance services in Chinese society is very low. Additionally, the companies lack skilled human resources for product development, management, and marketing, as well as technical knowledge. Most insurance companies concentrate their activities on urban areas, leaving the rural population without access to basic insurance products. Furthermore, there is a lack of insurance products for low-income households.
Theoretically, insurance is an instrument of risk management that helps to pool risks and protects individuals from the effects of extreme situations such as loss through natural disaster. Raising financial confidence and protecting from large financial losses, insurance can help to smooth cash flows, and stabilize financial and economic development. Acknowledging its importance, the Chinese government supports the development of the insurance sector, especially in areas where there is no or only little access to relevant products.
Together with the China Insurance Regulatory Commission, GTZ is developing weather insurance solutions, giving low income households and small and medium sized enterprises exposed to high weather related risks an opportunity to secure themselves against loss resulting from natural influences. Next to supporting financial stability, this helps the affected population to better adapt to the effects of climate change. For more information on our activities in this field, please visit our detailed project description: