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Insurance Sector Assets Soar, Problems Loom The gross assets owned by China's fledgling insurance sector reached a record high of 1.0359 trillion yuan ($US126.3 billion) by the end of May, according to insurance officials, who also warned against blind pursuit of premiums. The amount of disposable capital of the country's growing insurance sector also stood at 952.4 billion yuan ($116.1 billion), said Wu Xiaoping, vice-chairman of the China Insurance Regulatory Commission (CIRC), the national insurance watchdog agency. The figures indicate that China's insurance industry has entered a new phase of development that is characterized by fast development, the rapid expansion of premium revenue - and a lack of choices for the sector to invest its capital for profits. Of the total premium revenue, Wu said, 52.5 percent had been put into banks, with bonds and funds accounting for 31 percent and 6.86 percent respectively. There were few long and medium-term investment products available for the sector, as China's young financial market had yet to be developed, he said. But Wu was optimistic about the prospects of the insurance sector, as the country's economy would maintain rapid and healthy growth for a long period and the financial market would be improved constantly. Earlier this year, CIRC Chairman Wu Dingfu warned the industry against the blind pursuit of premium increases when the government was seeking balanced and sustainable growth. Noting that the irrational pursuit of premium growth has led to such problems as inadequate reserves in insurance companies and increased business risk, he urged the development of not only premiums but also efficiency and credit in the industry. "The insurance business neither met the needs of society nor played the role it should though it grew rapidly in recent years," he said. Government assistance remains the major method for disaster relief in China, while in some developed countries insurance companies play the main role, he noted, adding that the industry still contributed to a small proportion of the country's economy. Premiums in China's insurance industry totaled 338.04 billion yuan ($40.87 billion) in 2003, a year-on-year rise of 27.1 percent, while the industry's total assets were worth 912.28 billion yuan ($110.31 billion) by the end of the year. Who Are We ? | About THISDAYOnLine.com | THISDAY People | Contact Us © Copyright 2000 Leaders & Company Limited

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