Friday, March 28, 2008

China develops micro insurance in rural areas

China's insurance regulator is preparing to build a micro insurance market in rural areas, in an effort to help farmers and low-income urban residents better manage risks.

An evaluation mechanism for micro insurance, which will give details of the definitions of micro insurance, operation principle, objects, sales model and supervision policy, will be built by China Insurance Regulatory Commission (CIRC), according to sources with CIRC.

China's insurance giants, China Life <601628><2628>, and PICC Property and Casualty Co Ltd <2328>, have headed to develop the micro insurance in the rural areas. International insurers such as Zurich Financial Services Group, which have started research for entering China's micro insurance market, also showed growing interest in this sector.

China Life has developed a simple life insurance product, offering an eight-time refund on an annual premium of RMB 100 for farmers to guard against fatal accidents. It covered 1.2 million farmers last year, with a total insurance income of RMB 1.12 billion, according to CIRC.

The country is a great potential market for the micro insurance business, as it has 800 million people in the rural areas.

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