How Well is Chinese Insurance Working

How Well is Chinese Insurance Working

The Chinese insurance sector is currently roaring and bustling. Overall, it emits a feeling akin to swimming in a refreshing pool on a hot afternoon! What is more, the insurance business is fast persuading hordes of fresh consumers, investors, and firms, especially by reinforcing excellent security and cash. What is behind the runaway success of the booming Chinese insurance? No big secret. It has a lot to do with a new, summerlike, business environment that is strongly supported by the Beijing government. Happily, things have become even easier for insurance companies. They now provide consumers with all types of services.

In 2012, the Chinese Insurance Regulatory Commission arranged for a policy that pushes for vast simplification of business. This helped most insurance firms to expand, profiting well from investments in a variety of financial services, bonds and stocks.

How have many Chinese life insurance companies performed in this bustling environment? In times past, the firms did not have many issues with liquidity. Why? The debts they dealt with were mainly long term. As time went by, however, the short term liabilities gradually placed most companies at a higher risk.

Risk Factors

Speaking about business opportunities, the risks were soon absorbed in the booming insurance environment. According to a reliable industry authority, up to the end of February 2018, the Chinese Insurance Regulatory Commission has been busy processing applications from more than a hundred and thirty new companies that wish to establish their business by selling insurance bonds.More recently, officials of the CIRC, in a meeting convened to guide the Chinese insurance firms, made a most interesting declaration. The authorities revealed that most of the shareholders were clandestinely using insurers to gain funds for anonymous firms secretly. The range of the funds involved was generally undisclosed.

This was a truly startling revelation that exposed the soft underbelly of the Chinese insurance sector. Moreover, this pointed government statement served as a subtle warning to firms that would not toe the line to be aware that a notice had been served. It was not left to doubt that the government is keenly aware of the activities of these firms and would act when necessary. Further, the situation catalyzed a groundbreaking spirit, since most new insurance firms have come up only in recent years. Indeed, since February, more than a hundred new companies sought operating business license from the government.


The simplification of business, as well as its steady rise, has been the trademark of Mr. Xiang, the current CIRC chairman's tenure. His tenure at the helm of the CIRC began in 2011. Since then, he has capably steered impressive commercial improvements in the areas of firm policy, insurer fund investments, and policy premium rates. On February 22nd, there was a fascinating interview done with Caixin touching on matters to do with Chinese insurance. Xiang, for his part, has been aware that the climate of reform in China is progressively evolving, becoming ever sophisticated, owing to the recent economic downturn. This financial meltdown has been spreading rapidly through China, particularly since 2014.

Interestingly, regarding the risks for the Chinese economy, Xiang humbly admitted that there are quite a few risks involved. He said that, as the economic meltdown gains ground, some sectors, like that of the insurance rapidly expand, impacting on assets, investments, companies, and clients. This is paradoxical since the other branches of the economy are affected negatively by the slightest signs of economic downturn or slowdown. Xiang is, however, quite confident that the state regulatory machination is the right way to go for China, especially because it won enthusiastic support from the Beijing government officers, at the highest level. No wonder, it was only a question of time before he took the pivotal post and job as the CIRC chairman.

Insurance Boom

Information emanating from Ministry officials in the central government indicated that the main task for the insurance sector has always been to open up the space for new insurance fund investments. This is in accordance with the statement released by Xiang. He also said that the industry faces different hurdles and probabilities too.

Caution must, however, be exercised as the watchword for most newbies in Chinese business. How? Having discovered an opportunity for earning, there are several other factors to consider. These include short term, non-conventional insurance plants. Such plans give ample coverage for some three months, at most.