Navigating the insurance maze

The world's middle class, comprised of people with assets ranging between $10,000 and $100,000, now stands at 1 billion. The Chinese middle class has more than doubled since 2000 and amounts to one- third of the group, according to Credit Suisse's Global Wealth Report 2014.

Insurance penetration, a key indicator of the industry's role in the overall economy, is expected to reach 5 percent in China by 2020, the State Council said in August.

The rate, calculated by dividing the overall premium by GDP, now hovers at around 3 percent, indicating huge growth potential. The global average life insurance penetration stood at 3.69 percent by the end of 2012.

Insurance density, calculated by dividing the premium by population, is estimated to hit 3,500 yuan ($565) per person by 2020, up from the current 1,266 yuan.

Statistics from the China Insurance Regulatory Commission showed that China's premium income stood at 1.72 trillion yuan in 2013, ranking fourth globally. Yet it is still way below the $1.3 trillion paid in the US and below even the UK's $330 billion, according to Munich Re and Swiss Re data.

"China's insurance industry is still in the early stage of development," Luo Zhongmin, former chairman of the Insurance Institute of China, said last month.

As the market promises more growth opportunities now than ever before, Tucker says AIA would like to "expand across the whole of the country".

The company currently operates in Beijing, Shanghai, Shenzhen, Guangdong, and Jiangsu, or the Chinese mainland's better-off regions, only.

"We are talking to the Chinese authorities to try and understand how best we can open this up, but this is a major policy decision that clearly will take time," Tucker said.

Foreign insurance companies, the category AIA falls into despite its Shanghai origins in the CIRC's official list, had a 5.6 percent market share in China's insurance market in 2013, according to accounting advisory firm Ernst & Young's latest report of foreign insurance companies operating in the Chinese mainland market. The report interviewed 27 foreign insurance companies' chief executive officers and senior executives operating in China.

However, Tucker remains optimistic, as he sees the investment environment in insurance "has been opening up" and this is a process AIA has seen in many countries.

"We think it will happen in China over time, but there's been some relaxation and it's important the Chinese authorities ensure there are orderly markets and things are done at the right pace," Tucker said.

"We believe in the country and the future. Therefore we'll wait as long as we need to wait," he said.

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