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Licensed Unlicensed Requires Authentication Published by De Gruyter April 9, 2020

Estimating China’s Future Life Insurance Market

Jiyue Ma, Fei Huang and Aaron Bruhn ORCID logo

Abstract

After decades of economic expansion, China is transitioning to meet the insurance needs of its aging and increasingly affluent population. Of particular interest to insurers and reinsurers is China’s life insurance industry, which is likely to be globally significant due to its size and scale of opportunity. The long term nature of life insurance will also see it play a key role in China’s financial and capital markets. By uniquely accounting for demographic, economic and insurance-specific factors, we estimate the long term size of China’s life insurance market, giving an important indication of the scale of its future influence.

Appendix

A Appendix

Table 5:

Countries with GDP data from 1960 (110, indicated “G”), and countries with life insurance penetration data from 1980 (91, indicated “I”).

Algeria (G,I)Denmark (G,I)Kuwait (I)Romania (G,I)
Angola (I)Dominican Republic (G,I)Latvia (I)Rwanda (G)
Argentina (G,I)Ecuador (G,I)Lebanon (I)Saudi Arabia (I)
Australia (G,I)Egypt (G,I)Lesotho (G)Senegal (G)
Austria (G,I)El Salvador (G,I)Lithuania (I)Serbia (I)
Bahamas (I)Equatorial Guinea (G)Luxembourg (G,I)Seychelles (G)
Bahrain (I)Estonia (I)Madagascar (G)Singapore (G,I)
Bangladesh (G,I)Ethiopia (G)Malawi (G)Slovakia (I)
Barbados (G,I)Fiji (G)Malaysia (G,I)Slovenia (I)
Belgium (G,I)Finland (G,I)Mali (G)South Africa (G,I)
Benin (G)France (G,I)Malta (G,I)Spain (G,I)
Bolivia (G)Gabon (G)Mauritania (G)Sri Lanka (G,I)
Botswana (G,I)Gambia (G)Mauritius (G,I)Sweden (G,I)
Brazil (G,I)Germany (G,I)Mexico (G,I)Switzerland (G,I)
Bulgaria (I)Ghana (G)Morocco (G,I)Syrian Arab Republic (G)
Burkina Faso (G)Greece (G,I)Mozambique (G)Taiwan (G,I)
Burundi (G)Guatemala (G,I)Namibia (G,I)Thailand (G,I)
Cabo Verde (G)Guinea (G)Nepal (G)Togo (G)
Cameroon (G)Guinea-Bissau (G)Netherlands (G,I)Trinidad and Tobago (G,I)
Canada (G,I)Haiti (G)New Zealand (G,I)Tunisia (G,I)
Central African Republic (G)Honduras (G)Nicaragua (G)Turkey (G,I)
Chad (G)Hungary (I)Niger (G)Uganda (G)
Chile (G,I)Iceland (G,I)Nigeria (G,I)Ukraine (I)
China (G,I)India (G,I)Norway (G,I)UAE (I)
China, Hong Kong SAR (G,I)Indonesia (G,I)Oman (I)United Kingdom (G,I)
China, Macau SAR (I)Iran (G)Pakistan (G,I)United Republic of Tanzania (G)
Colombia (G,I)Ireland (G,I)Panama (G,I)United States (I)
Comoros (G)Israel (G,I)Paraguay (G)USA (G)
Congo (G)Italy (G,I)Peru (G,I)Uruguay (G,I)
Costa Rica (G,I)Jamaica (G,I)Philippines (G,I)Venezuela (G)
Côte d’Ivoire (G)Japan (G,I)Poland (I)Zambia (G)
Croatia (I)Jordan (G,I)Portugal (G,I)Zimbabwe (G,I)
Cyprus (G,I)Kazakhstan (I)Qatar (I)
Czech Republic (I)Kenya (G,I)Republic of Korea (G)

B Appendix

Steps involved in calculating projected life penetration rates using BRIP, based on Zheng, Liu, and Dickinson (2008):

Step 1: Historical BRIP can be obtained by dividing historical penetration by historical benchmark penetration, which is derived from the ‘S-curve’ model using historical GDP per capital level.

Step 2: Applying an AR(2) model to historical BRIP from 1980 to 2005, Zheng, Liu, and Dickinson (2008) projected China’s life BRIP to be 2.31 in 2020.

Step 3: To obtain projected benchmark penetration rates, Zheng, Liu, and Dickinson (2008) assumed three hypothetical 2006–2020 GDP annual growth rates (6%, 7.5%, and 9%). Under each scenario the 2020 GDP per capita level was derived, and a benchmark penetration under each of these three scenarios was then calculated.

Step 4: Multiplying these figures with the BRIP of 2.31, Zheng, Liu, and Dickinson (2008) concluded that the projected life insurance penetration for China in 2020 was 2.34%, 2.51%, and 2.73% when the 2006–2020 GDP growth rate was 6%, 7.5%, and 9%, respectively.

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Published Online: 2020-04-09

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