New rules to regulate and promote the development of life
insurance in rural areas are to be released by China's insurance
watchdog.
"The rules will probably be made public at the end of this month
or early October," Gong Yisheng, director of the system department
of the China Insurance Regulatory Commission (CIRC), told China
Daily yesterday.
Gong disclosed that the threshold for insurers' entry into rural
areas will be even higher than for cities due to the fragility of
the rural market. For instance the insurer should have outlets in
local markets to ensure proper services for rural residents. And
they'll not be allowed to depart the rural market at will. "All
these measures aim to maintain a good environment for insurance
development in rural areas," Gong explained.
With the 'word of mouth' phenomenon particularly powerful in
rural areas misleading sales or unreasonable refusal of claims will
result in mass reimbursement demands thus damaging the local
insurance market, he said.
At the moment accident and health insurance are the best sellers
in the countryside but products tailored to farmers are in short
supply.
"Comparatively high premiums, inflexible payment terms and
incomprehensible policy clauses are the major problems," said Zhou
Fuping, a researcher with the CIRC adding that most insurers made
little or no changes to their rural area policies.
"To give farmers more choice insurers are encouraged to offer
more affordable policies and easy to understand clauses when
entering the rural market," said Gong. "We'll soon embark on a
pilot program that differentiates premiums in different
regions."
The life insurance industry in China's countryside has developed
rapidly in recent years. There are around 14,000 outlets in rural
areas which cover 30 percent of towns and villages. For example
China Life, the country's largest life insurer, has 427,000 sales
agents in counties and secured 12.9 billion yuan (US$1.6 billion)
of premiums from countryside customers in the first half of this
year.
When developing the rural market insurers are also paying
attention to migrant workers. Statistics show that China has some
120 million such workers which accounts for one-tenth of the total
population. To better protect their livelihoods local governments
have played an active role in helping them get insured.
In Shanghai insurers, entrusted by the Shanghai municipal
government, offer comprehensive insurance to migrant workers. By
the end of 2005 about 2.5 million of these workers had been insured
with claims topping 200 million yuan (US$25 million). Furthermore
some insurers, such as New China Life, offer services that enable
migrant workers to get timely reimbursement in the city even if
they buy the policy in their hometowns.
"We'll strive to popularize this service in Beijing, Shanghai,
Guangdong and Shenzhen -- the major
destinations for migrant workers," said Gong. "In major labor
exporting provinces such as Shandong, Sichuan, Hunan and Anhui we'd like to offer more affordable
insurance products with financial support from the local
government."
(China Daily September 7, 2006)