Posted by Chaoran Hu
China is fast becoming one of the world's most important economies. Although its financial services sector is still small compared to the US, Europe, or Japan, its rapid growth rates and huge potential size make it a critical arena for expansion for both insurers and solution providers. Celent’s latest report, Insurance in China: Market and IT Overview, provides an overview of this important market and a high-level look at some of the key organizational and IT-related issues for both local Chinese and foreign insurers. Future Celent reports may examine specific elements of this market more closely, especially the roles and positions of local and international solution providers.
Since 2000, the Chinese insurance market has tripled in size to about US$60 billion in premium, and Celent estimates that it is on track to exceed US$100 billion by 2009. IT Spending currently accounts for approximately 3.5% of premium, but Celent projects that this will rise to 5% of premium by 2009 as insurers continue to build out their increasingly complex IT infrastructures. "As Chinese and foreign companies compete in this market, they face different organizational and technological challenges. Chinese companies have an advantage with their market knowledge and especially with their relationships with regulators, but are hampered by underdeveloped business practices and technology," comments Matthew Josefowicz, manager of Celent’s insurance group, and lead author of the report. "Foreign entrants are typically further advanced in those areas, but must adapt to a new market which operates differently from the more mature markets that many are used to dealing with."