Chinese Insurance Market

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Economics of Business Strategy
Strategic Analysis of Ping An Insurance Company of China, Ltd

1. Introduction

Ping An Insurance Company of China, Ltd was first established in 1988. It is the first integrated financial services conglomerate in China. The core business of this company is insurance operation. Meanwhile, it also engages in securities brokerage, trust and investment, commercial banking, asset management and corporate pension business. Till now, this integrated financial services conglomerate is holding 11 subsidiary companies which could be divided into three main groups—insurance, banking and investment all over China. It owns about 394,000 life insurance sales agents, over 83,000 full-time employees, and more than 3,800 branch- and sub-branch-units and sales offices to provide financial services about 47 million individual clients and over two million corporate clients. By premium income, Ping An Life is the second largest life insurance company in China, while Ping An Property & Casualty is ranked third largest among property and casualty insurers in China (Ping An Insurance group).

In June 2009, Ping An was ranked No.2 among global life insurers in The Financial Times Global 500 companies list. In addition, Ping An is the first insurer who has introduced foreign investors into its shareholding structure in China. As at 30th June 2009, under International Financial Reporting Standards, consolidated total assets and total equity of the Group were RMB885.419 billion and RMB101.793 billion, respectively (Ping An Insurance group).

This paper is structured in four sections.
Firstly, it analyzes Chinese insurance market in which Ping An Insurance Company of China, Ltd operates and then examines the business strategies which are adopted by the company. In the third section, a serious issue that exists in the company will be pointed out and reasonable recommendations will be made. The final section is conclusion.

2. The analysis of Chinese current insurance industry

Objectively speaking, owing to the influence of historical factors and national conditions, China hasn’t developed a mature insurance market as the developed countries till now.

(1)China's insurance market is basically an oligopolistic market. At present, there are 14 general insurance suppliers (including eight foreign insurers) in China, offering more than 300 types of property and liability insurance products (Zou, 2003). However, several giant insurance companies have totally dominated the whole market. According to the report of China Insurance Regulatory, Commission the People's Insurance Company of China ,Ping An Insurance Company of China and China Pacific Insurance Company which are the top three composite insurance suppliers in the People's Republic of China accounted for nearly 90 percent share of Chinese insurance market together (Zou, 2003).

That is to say, Chinese insurance market, though a competitive pattern has been preliminarily formed, is still monopolized by several large companies in general.

(2)PEST Analysis

Chinese insurance market has a great potential to develop.China has a large population. The total population of 1.3 billion has provided a rich resource of potential insurance for the insurance market. Besides, there is a good and stable economic environment in China which could boost the insurance industry. The steady growth of national economy in China, the increasing level of people's income and growing insurance consciousness and other favorable social and economic factors are promoting the rapid development of Chinese insurance market. Furthermore, the last 20 years witness the rapid development of information technology and Internet. As a result, the introduction of new communication way has exerted unprecedented impact on almost all aspects of economy and society and insurance industry is no exception. It seems possible for insurance companies to develop business through new channels and to...
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