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The Chinese Insurance Market: Estimating its Long-Term Growth and Size*

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  • Wei Zheng

    () (School of Economics, Peking University, Beijing 100871, P.R. China.)

  • Yongdong Liu

    (Center for Chinese Agricultural Policy, Institute of Geographical Sciences and Natural Resources, Chinese Academy of Sciences, Beijing 100101, P.R. China)

  • Gerry Dickinson

    () (Cass Business School, City University, London, 106 Bunhill Row, London EC1Y 8TZ, UK.)

Abstract

The mid-term and long-term growth potential of China's insurance industry is a subject of significant interest to governments, business and academia. In this paper, the “world insurance growth curve” is used in conjunction with estimates of China's future GDP growth to estimate the growth and size of China's insurance industry for the period 2006–2020. There are clearly other factors – social, political, cultural, demographic and market structure – that also have an impact, but other empirical studies have shown that the key factor in the long term is growth and development of the overall economy. Assuming that China's GDP grows over that period at a rate of 6–9 percent per year, we conclude that the possible range of China's insurance industry growth rate would be 7.7–17.9 percent, with a more likely range of 9.8–14.8 percent. In the median scenario, the average annual real growth rate for China’s insurance industry during the period 2006–2020 would be 12.3 percent. Thus, by the year 2020, the size of China’s insurance market would be 5.7 times of that of 2005, and the overall insurance penetration would be 5.6 percent, with 4 percent for life insurance and 1.6 percent for non-life insurance. The growth rate of China’s insurance industry during the period 2006–2020 would be almost double the world average and by 2020, China’s share of the world insurance market would be about 4.0 percent. The Geneva Papers (2008) 33, 489–506. doi:10.1057/gpp.2008.19

Suggested Citation

  • Wei Zheng & Yongdong Liu & Gerry Dickinson, 2008. "The Chinese Insurance Market: Estimating its Long-Term Growth and Size*," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 33(3), pages 489-506, July.
  • Handle: RePEc:pal:gpprii:v:33:y:2008:i:3:p:489-506
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    References listed on IDEAS

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    Cited by:

    1. repec:spr:empeco:v:53:y:2017:i:3:d:10.1007_s00181-016-1154-9 is not listed on IDEAS
    2. Giovanni Millo, 2016. "The Income Elasticity of Nonlife Insurance: A Reassessment," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 83(2), pages 335-362, June.
    3. J. François Outreville, 2011. "The relationship between insurance growth and economic development - 80 empirical papers for a review of the literature," ICER Working Papers 12-2011, ICER - International Centre for Economic Research.
    4. Eglantina Zyka & Elena Myftaraj (Tomori), 2014. "Factors affecting the insurance sector development: Evidence from Albania," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 17(51), pages 171-188, March.
    5. Liu, Guan-Chun & Lee, Chien-Chiang & Lee, Chi-Chuan, 2016. "The nexus between insurance activity and economic growth: A bootstrap rolling window approach," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 299-319.
    6. repec:eee:intfin:v:51:y:2017:i:c:p:155-170 is not listed on IDEAS
    7. Guo, Feng & Huang, Ying Sophie, 2013. "Identifying permanent and transitory risks in the Chinese property insurance market," The North American Journal of Economics and Finance, Elsevier, vol. 26(C), pages 689-704.
    8. Lee, Chien-Chiang & Chiu, Yi-Bin, 2012. "The impact of real income on insurance premiums: Evidence from panel data," International Review of Economics & Finance, Elsevier, vol. 21(1), pages 246-260.

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