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In recent years, Life Insurance Industry in China has been developing rapidly, with premium income of life insurance products increasing from $39.0 billion in 2004 to $107.2 billion in 2008. This represents an annualized growth rate of 28.8%.

Unbalanced Products and Channel Structure
Despite the rapid development in premium income, there are two obvious problems with this industry: first, unbalanced product structure, characterized by high share of short-term and investment products and low share of security-oriented and long-term saving products; second, unbalanced sales channel of life insurance products, characterized by over-reliance on banking and postal channel.

The outbreak of global financial crisis has made life insurance companies realize the risk and shortcomings of unbalanced product structure and sales channels. The constant interest decrease since the second half of 2008 has also created opportunities for product structure adjustment.

Product Structure Adjustment Achieved Initial Success
From September 2009, CIRC took a series of measures to promote the industry to reassume social security function and reduce the share of banking channel, to realize product and channel adjustment.

During the first three quarters of 2009, due to high base in the last phase and product structure adjustment, overall premium income of life insurance products only increased by 4.1%. However, since 2008, the unbalanced product structure has been changing, with large declining share of universal insurance and investment-linked insurance as well as the increasing share of profit-participating and traditional life insurance products.

In the first half of 2009, with the adjustment of product structure, the life insurance products (especially investment-type insurance products) sold through banking channel declined for the first time in recent years, while life insurance premium income realized by insurance sales people increased rapidly, holding the largest share again.

Benefits of the Industry's Reassuming Social Security FunctionIt takes time for the industry to fully reassume social security function. However, the change is helpful for sustainable development and reasonable operation of life insurance carriers. It also helps to satisfy customer demand.

By courtesy of ©ACMR-IBISWorld Reports, 2009

ACMR ALL CHINA MARKETING RESEARCH CO., LTD.