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China Insurance market PDF

China Insurance market

The official name is the people's Republic of China. It is located in the Eastern part of the Eurasian continent on the West coast of the Pacific ocean. Area 9.6 million km2, num. The population of 1284.53 million people. The capital is Beijing.

Over the past 10 years, China has made impressive progress in the economy. GDP growth averaged 7 % per year and is projected to remain at this level. GDP in 2002 was 10.24 trillion. yuan. GDP per capita is 7972 yuan per year.

2.1 Economic development of China insurance market

The object of attention of many Western insurance companies has now become the insurance market of China. The increased interest of foreign insurers has also increased to a large extent due to the increase in economic growth.

Commercial insurance in China has existed for about 20 years, and during this time the insurance market has grown rapidly.

The ongoing institutional and legislative reforms in a number of sectors of the economy, primarily the financial sector, are yielding positive results.

To meet the needs of customers, insurance companies in China are constantly introducing new forms and categories of insurance policies.

In 20 years of reform, China has made impressive strides.

Analysts predict that by 2010, China could become the world's largest economic power.

The large-scale economic reforms carried out in China in recent years open up new opportunities for the country's involvement in the globalization process. China actively participates in the international division of labor and develops economic cooperation with various external partners.

Reform and expansion of foreign economic relations are held under the slogan of rapid economic development and deepening of structural reforms. Since 1985, control over purchase and commodity prices has been abolished. Foreign trade activity has become more open, focused on expanding ties with foreign countries. In Shenzhen, Zhuhai, Shanshodyu, turned into free economic zones, the policy of "open doors"is carried out.

Foreign economic cooperation in the field of design and contract works continues to develop. In the area of attracting foreign investment, there is a tendency to reduce external borrowing and increase direct investment. Since 1994, the Chinese government has faced the challenges of reforming state-owned enterprises and structural transformation. The problem of unbalanced development of industries and regions of the country, primarily Western, is becoming more acute.

In 1998-2000, reforms were carried out in three areas: in the public sector, in the financial sector and in the government apparatus. The fate of the reform as a whole largely depended on the success of the reforms in these areas. In 1998, the textile, coal, oil and chemical industries were reformed. A draft reform of the health care system was approved.

Since 1998, China has initiated financial reform: measures have been taken to improve credit services for small and medium-sized enterprises. In 1999, liberalization of the financial sector began: geographical restrictions on the placement of branches and branches of foreign banks were abolished. Prior to that, foreign banks operated in 23 cities and Hainan province.

In 1998, the people's Bank of China was reorganized and 31 provincial branches were abolished. Instead, they established 9 interregional branches. Separate management of banking and insurance activities was introduced. To this end, the Central financial working Committee was established to monitor banking structures and the Commission of Insurance Regulation of China, CIRC, to promote the development of the national insurance market. The main tasks of KRSD:

- development of insurance policies, regulations and development plans;

- supervision and management of processes in the insurance business;

- application of sanctions for illegal activities according to the law;

- protection of interests and rights of policyholders;

- ensuring fair competition in the insurance market;

- creation of a system for identifying and preventing risks in order to reduce them.

The process of reforming the insurance industry in China in 2002 had a significant impact on the access of foreign insurance companies to the domestic market. The depth and breadth of the opening of the insurance sector to the outside world is gradually increasing. In 2002, 6 foreign insurance companies received permission to establish their units in China, which will carry out insurance activities in China. Among them named above "Munich Re", "Swiss Re", English CK "Standard Life", American "Liberty Mutual Insurance", Japanese "Property Insurance Company" , and also "CIGNA Group Insurance".

At the same time, positive trends in regional liberalization have changed over the past year. If earlier the activities of foreign insurance companies were allowed only in Shanghai and Guangzhou, now this list has been supplemented by the cities of Shenzhen, Dalian and Foshan. In accordance with the promises of the PRC upon accession to the WTO in 2004, foreign insurance companies offer their services in the following 10 additional cities: Beijing, Chengdu, Chongqing, Fuzhou, Suzhou, Xiamen, Ningbo, Shenyang, Wuhan and Tianjin.

After many years of rapid economic development, the overall level of the country's economy has significantly increased.

During the first 3 quarters of 2002, China collected insurance premiums worth 226.27 billion yuan (27.5 billion U.S. dollars), an increase of 76.85 billion yuan (9.35 billion U.S. dollars) over the same period the previous year. The growth was 51.4 %. The collection of insurance premiums for the first 3 quarters of 2002 exceeded the volume of premiums collected for the whole of 2001. As of the end of November last year, the volume of insurance premiums collected reached 273.77 billion yuan (33.3 billion dollars). This is an increase of 47% over the same period in 2001.

The year 2002 was the most dynamic development of China's insurance sector in the history of insurance relations in this country. Innovations in the management and supervision of insurance activities, the introduction of new insurance products, innovations in customer service, as well as honest business conduct became the main driving force of this rapid development. The features of the development of insurance over the past year include the following:

- rapid growth of core business. During the year after China's accession to the WTO, the number of insurers increased significantly-there was an increase in the number of subsidiaries of commercial insurance companies, new insurance companies were authorized and created (for example, the life insurance company "Deng"), foreign presence increased – the English "Standard Life", the American "Liberty Mutual Insurance", the Japanese "Property Insurance Company", etc. entered the Chinese market. This indicates that the Chinese insurance market continues to grow steadily by expanding the activities of both domestic and foreign insurers within the country;

- continuous increase in the number of new insurance products. In 2002, all insurers, in order to meet the demand of policyholders while increasing the efficiency of their activities, paid great attention to the development of new insurance products and the creation of new insurance products. In life insurance the number of insurance products of accumulative nature has continuously increased, in health insurance the age limits have expanded. By this year, in China's insurance campaigns, the innovation in insurance products was that they began to be created on the basis of the principle of individual approach to each policyholder;

- stable improvement of service quality. In 2002, all companies have already established service and information centers for customers, began to offer new insurance services through the Internet, increased the level of service in the implementation of insurance payments.

All these factors contributed to the rapid and healthy development of China's insurance industry.

2.2 organization of insurance business in the people's Republic of China

The Chinese view of the legislative system, based on traditional Confucian postulates about the constant need for consensus, differs greatly from the traditional understanding of laws. According to the traditional understanding of law, a person is governed by law; in China, laws are governed by people and it is believed that if a particular action is not prohibited by law, then the law is usually interpreted as authorizing the action.

The insurance market of China is at the stage of formation. Therefore, of particular interest are the stages of formation of the legislative basis of insurance activity:

- 1981 (amended in 1993) – Law " on conclusion of contracts»;

- 1983 " Rules of conclusion of property insurance contracts»;

- 1985 " Provisional rules for the management of insurance companies»;

- 1992 Code of merchant shipping of China;

- 1992 "Temporary measures for the management of insurance companies with foreign capital in Shanghai".

A turning point in the formation of the legislative framework was 1995, when a package of laws aimed at the formation of financial services industries was adopted. Currently, the legal framework for the functioning of financial services in China is represented by the following laws:

- "On the People's Bank of China" (March 18, 1995);

- "On commercial banks "( may 10, 1995);

- "On insurance" (June 30, 1995);

- "On trading financial instruments" (adopted in may 1995);

- "On guarantees" (of June 30, 1995).

The adoption of a package of laws aimed at the formation of financial services industries was the result of a multi-year legislative program. In particular, the approved Law "on insurance" was developed on the basis of 5 years of experience in the functioning of insurance markets in 13 countries of Europe, Asia and North America.

 

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