Rural micro-insurance has rosy future

China Life Insurance Company (China Life for short) held a "Rural Small-sum Insurance Pilot Launch and New Product Release Meeting" in Taiyuan City, Shanxi Province on August 12th. In fact, China life was not running a one-man show. According to China Insurance Regulatory Commission, this meeting symbolizes that Chinese rural small-sum insurance project winning people's close attention has officially come into the pilot phase. The leaders from China Insurance Regulatory Commission and the first batch of 9 Provincial (or Regional) Insurance Regulatory Bureaus have attended this meeting. This meeting will undoubtedly be of special and positive significance to the development of Chinese rural insurance industry.

With the features of small premium and low amount insured, the rural small-sum insurance can be regarded as an important part of rural small-sum finance. At present, small-sum insurance has won world's attention widely. The international organizations like International Association of Insurance Supervisors officials, the International Labour Organization, the World Bank etc. are studying and promoting small-sum insurance, and over 100 countries in the world have launched it. The experience of small-sum insurance in such developing countries as India and the Philippines has proven that in the rural areas which are short of social security system, the small-sum insurance is an effective way to provide the basic security to rural poor people, and it has strong vitality.

The promotion of rural small-sum insurance in our country is beneficial to the big population of Chinese peasants. In the national insurance work conference of this year, the China Insurance Regulatory Commission officially defined the promotion of small-sum insurance as the focus of this year. As early as last May, with Life Insurance Division as the pioneer, the China Insurance Regulatory Commission has organized a special project team and got together with the people from 5 provincial Insurance Regulatory Bureaus and 4 Insurance companies to study the experience of the small-sum insurance from the foreign countries. Besides, with consideration of the relative policies for Chinese rural finance and after the deep research and discussion of half a year, they have put forward the policy suggestions for the development of small-sum insurance. This year, the China Insurance Regulatory Commission led the relative Insurance Regulatory Bureaus and China Life to do the questionnaire survey of over 10 thousand rural families in 8 provinces (or regions), have informal discussions with peasants and conduct field research. Finally they made the decision of launching small-sum insurance pilot in the rural areas of the middle and western China including Jiangxi, Henan, Guangxi, Sichuan, Gansu etc.

China Life, the first one getting the approval has already entered the market in rural areas long ago, and now started to be rewarded. It is understood that by the end of July, China Life's County business has reached RMB110.1 billion yuan with an increase of 51 percent compared with last year, and it accounts for 55 percent of China Life's total premium and half of China Life's total business. China Life is even positioning the rural small-sum insurance as the inherent requirements for the rapid development of their company. Last year, China Life had a try to launch one product in China named "The first insurance beneficial to the peasants --New Simple Life Insurance". By the end of June this year, "New Simple Life Insurance" has achieved a total premium income of RMB 1.7 billion yuan, the new insurance policies of 1.32 million pieces with RMB 1,138 yuan as the average premium for each piece. China Life draws the conclusion that the promotion of the "New Simple Life Insurance" and other insurances in the counties will improve the business structure of China Life; especially enhance the cultivation of the core values.

In fact, apart from China Life, in recent years, more and more insurance companies have paid attention to the rural market called "Wealth at the Bottom of the Pyramid". For example, Ping An of China launched the dual market strategy, Taikang Life Insurance also began to establish a large number of agencies in the rural areas this year, and some branches of the Chinese People's Insurance is offering the comprehensive insurance in the rural areas which is equivalent to the small-sum insurance. It is understood that many other insurance companies are actively preparing to enter the rural market. Insiders believe that, with the cooperation between the commercial banks and insurance companies, the joint venture insurance companies will further strengthen their capital, then most likely they will shift their eyes to the rural market with huge potential due to the intense competition in the city insurance market.

For the small-sum insurance products, the China Insurance Regulatory Commission pointed out that the pilot must always be carried out in the order of "first security, then investment; first short term, then long term" so as to provide peasants with the correct awareness for insurance. China Insurance Regulatory Commission has promised that they will give strong support to China Life and the other insurance companies starting the pilot project of the rural small-sum insurance afterwards in the terms of reducing the supervision fee, relaxing the restrictions for the sales channels, sales qualification and the assumed interest rate, and protecting the pilot companies etc. It is learned that China Life has basically completed the proposals for the operation of small-sum insurance, and the test for the business management system.

China Life launched 7 small-sum rural insurance products this time, all of which are of accident insurance and term life insurance with strong security. Compared with their same types of commercial insurance products, they have two common features, namely, lower price and broader security scope.

The experts in this field believe that although with lower income, the peasants are of highly loyal customers, and the international experience for small-sum insurance has proven that large scale can create high efficiency. The income of Chinese peasants is gradually rising. Therefore it can be presumed that the customers of current small-sum insurance will be of the high-end ones in the future. Through innovation in the various aspects, the small-sum insurance released by China Life has displayed the features such as appropriate security, low premium and simple procedure for the claim and settlement etc., which can effectively meet the needs for security in the rural insurance market. Therefore, these products will play an example and leading role for the rural small-sum insurance coming afterwards, and will actively push forward the rural small-sum insurance in China.