Financial Insights Asia/Pacific Envisage Insurance Premium Expansions in Excess of 20% in China and India

International Players with Global Aspirations Need to Differentiate with Sophisticated Product Designs and Effective Customer-Focused Technology

SINGAPORE, Oct 7, 2005 – A recent publication by global independent research and advisory firm Financial Insights profiles the growth potential for the insurance sector in the emerging markets of China and India. The report, entitled Asia/Pacific Insurance – Attractive Dynamics in China and India, comments that the acceleration in economic momentum and nascent insurance industries, coupled with increased consumer risk awareness, pave the way for spectacular expansion going forth. Li-May Chew, CFA, senior research manager for Financial Insights Asia/Pacific and author of the report states, “With China enjoying greater liberalization on regulatory restrictions under the auspices of the World Trade Organization, and ownership rules in India becoming increasingly enticing to foreign insurers, these two exciting markets are engendering increased attention from global players.”

China’s promising economic growth coupled with commendable structural changes will enhance sector performance, and expectations are that the country will uphold its pole position as one of the fastest growing insurance markets globally. Life premium growth rates are projected to expand in excess of 20% per annum, with volumes more than doubling the next 5 years to $100 billion. Meanwhile, non-life operations appear poised to expand beyond $20 billion by 2010.

China: Growth in Life and Non-Life Premium Income Averaged >20% the last 5 years

Spurred by a brisk economic environment, expanding affluence, and higher risk awareness but erstwhile low penetration rates of 2.5% of GDP against mature market levels of at least 5%, India’s life insurance sector will likewise continue to expand at circa 20% per annum over the medium term.

Asia/Pacific in general – and China and India in particular – remain compelling targets for international insurers looking for high-growth opportunities and risk diversification. The report further discusses entry routes for foreign insurers into these two budding markets and provides suggestions for vendors serving the insurance space.

For international players that do not boast the vast distribution reach of incumbents, Li-May suggests “they differentiate themselves with targeted, personalized distribution networks, innovative customized offerings, sophisticated product designs and world-class customer service.” To empower such differentiation, insurers need to leverage a cohesive set of policyholder analytics to generate customer insights, create tighter segmentation of customers for target marketing and underwriting purposes, and introduce new products to market more rapidly. Getting a substantial toehold into China and India is a challenge but their untapped potential and aptitude for expansion make the globalization venture worth the while.

On pointers for vendors to penetrate the insurance market, Li-May commented that “it is crucial for vendors to offer newer more flexible IT service-oriented architectures, robust core processing systems including agent-facing distribution technology, as well as document management, imaging and issuing technologies. Also vital is the focus on robust core processing systems such as policy administration systems, comprehensive end-to-end claims processing systems, and customer-facing website portals,” concluded Li-May.

For more information on obtaining this report – Asia/Pacific Insurance – Attractive Dynamics in China and India, (Financial Insights, FIN1662, Oct 2005) – please contact: [email protected].

About Financial Insights, an IDC Company

Financial Insights provides independent research, custom consulting, and detailed multiclient studies on the technology issues and challenges facing the financial services industry. Our global research covers topics of strategic importance to corporate and retail banks, insurance carriers, asset management firms, securities and brokerage firms. Our local practices in Asia Pacific, Europe, Latin America and Canada add an in-depth regional viewpoint. Financial Insights, an IDC company, is headquartered in Framingham, Massachusetts, USA. IDC is a subsidiary of IDG, the world’s leading IT media, research, and exposition company.

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