Cliff Sheng, Partner and Head of Financial Services, Greater China, Oliver Wyman
China’s capital markets aren’t yet mature enough to support financial innovation; meanwhile, existing state-owned financial institutions are not reforming quickly enough. This gap in supply has provided opportunities for Chinese fintech players — who are being supported by rapidly growing online ecosystems and a tech-savvy population — in diverse fields ranging from investing to payments.
A Growing Insurance Market
While insurance penetration in China is currently low (3.6 percent in 2015) compared to developed markets such as the United Kingdom (10 percent) and the United States (7.3 percent), strong government support, coupled with a growing middle class, is making insurance products more accessible. In 2015, for example, total insurance gross written premiums (GWP) in China increased by 20 percent in 2015 to CNY 2.4 trillion (USD 355 billion).
In fact, the Chinese insurance market has doubled in size over the past six years. Based on China Insurance Regulatory Commission’s (CIRC) five-year plan and various other sources, the insurance market is forecasted to grow at 13 percent (compounded annually) up to 2020 to CNY 4.5 trillion.
The rapidly growing insurance market — albeit from a low base — in China is also opening up plenty of opportunities for insurtech (defined as insurance further enhanced through technology in a customer-centric way) (1).
This piece first appeared on BRINK.
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1. China Insuretech, Industry Report; Oliver Wyman; Click here for the report>>