China's insurance industry continued on its path of rapid growth last year, boosted by seemingly unstoppable momentum in one of the world's fastest-growing economies.

The China Insurance Regulatory Commission (CIRC) said Monday total insurance premium income for 2003 jumped by 27.1 percent on a year-on-year basis to 388 billion yuan (US$46.7 billion).

Life premiums came in at 301 billion yuan (US$36 billion), up 32.36 percent from a year earlier, while property premiums stood at 87 billion yuan (US$10.4 billion), an increase of 11.71 from 2002.

Premium growth slowed down from 2002's 33 percent, which the commission said was largely due to business readjustment measures as some insurance companies trimmed risky business in a bid to improve profitability.

Many Chinese insurance firms took measures last year to optimize business strategies, enhance internal control and improve product structure, after the CIRC stressed the balance between premium growth and profitability at the beginning of the year.

The SARS (severe acute respiratory syndrome) outbreak last year only mildly disrupted life insurance sales in some regions of the country, the CIRC said, but served to catalyze a surge in demand for insurance coverage.

Insurers garnered 34.6 billion yuan (US$4.1 billion) in health and casualty insurance premiums, soaring by nearly 70 percent from the previous year.

China's insurance market remains small, compared to other countries, despite high growth in recent years. Premiums accounted for only 3.33 percent of the nation's gross domestic product last year, while its insurance density, as measured by per capital insurance expenditure, stood at a meagre 28.7 yuan (US$3.5).

The Chinese economy expanded by 9.1 percent last year, the fastest pace since 1997.

Last year's reforms to liberalize premium rates on auto and aviation casualty insurance proceeded smoothly, the commission said, and market performance has been stable.

Auto insurance premiums registered 54.5 billion yuan (US$6.5 billion) last year, up 14 percent from a year earlier.

The rate liberalization reform had fuelled undercutting among auto insurers in 2002 and early last year, which had resulted in an aggregate loss among all market participants. Rates rebounded later last year as the reform proceeded.

"Thanks to the reform, insurance companies are increasingly abiding by market rules and rate levels are improving, catering to market demand fairly well," the CIRC said in a statement.

The commission also noted a significant improvement in the industry's risk resistance capacity as continued premium growth boosts assets and the initial public offerings of two leading state-owned insurers greatly bolstered the industry's aggregate capital strength.

The combined assets of all Chinese insurance firms stood at 912.3 billion yuan (US$109 billion) at the end of last year, up 41.45 percent year on year.

The industry's total payments, which include claims and benefits, stood at 84.1 billion yuan (US$10.1 billion) last year, the commission said.

Insurance companies continued to leave the bulk of their funds with banks as the authorities moved gingerly to loosen investment restrictions.

Bank deposits totaled 455 billion yuan (US$54.8 billion) at the end of last year, which accounted for 52 percent of the insurers' total investments, while another 140 billion yuan (US$16.8 billion), or 16.1 percent of total investments, was held in treasury bonds.

(China Daily February 10, 2004)