The Chinese government’s increased investments in the country’s poor and agricultural regions will accelerate rural residents’ annual spending on insurance premiums to ¥1 trillion ($141 billion), global insurer Swiss Re said on Thursday.
The projection from the world’s second-largest reinsurer comes five weeks after China held its annual “Two Sessions” parliamentary meeting, in which greater investments in infrastructure investments and a 0% poverty rate were set as key targets for 2020.
Swiss Re said these benefits to rural China — 41% of the country’s total population — will lead to a “‘blue ocean” opportunity for insurers, meaning a market with untapped demand and limited competition.
The insurer predicted that total rural premiums will grow 11.1% annually between 2020 and 2025, in contrast to the 3% annual growth seen in the previous five years. By 2025, the rural life and health insurance premium market is forecast to be ¥480 billion, and the property and casualty market to be ¥529 billion.
“With continued government support and late-mover advantage, we believe ongoing development of the rural economy will present many opportunities for insurers, especially in health, agriculture and motor,” Swiss Re said in the report. “Insurance companies are already working with the government to provide tailored products for rural residents, agricultural production and property.”
Swiss Re also expects China to surpass the U.S. and become the largest insurance market in the world in the 2030s, it concluded in a 2019 report. It predicted that insurance premiums will hit $2.36 trillion by 2032, driven by economic growth and an aging population buying retirement annuities.
Rural China has also been experiencing growth outside the insurance market. Swiss Re reported that from 2018 to 2019, the average disposable income for the rural population grew 9.6% to ¥16,000, compared with a 7.9% increase to ¥42,000 for urban residents.