Investment-linked products boost foreign insurers' premiums

Foreign life insurers in Shanghai are benefiting from a major increase in products linked closely to China’s booming stock markets, the Oriental Morning Post reported. The Shanghai Bureau of the China Insurance Regulatory Commission said foreign life insurers reported US$566.14 million (RMB4.28 billion) in premiums from individual clients in Shanghai in the first six months, up 38.8% year-on-year. The rise was credited to a drastic increase in investment-linked premium revenues sold through banks, which skyrocketed 87.1% to US$273.81 million (RMB2.07 billion) during the period. In comparison, premium revenues for domestic individual life insurers dropped 6.43% to US$1.11 billion (RMB8.36 billion) in the first half of the year. Losses were driven by a 15.7% decline in premium revenues for traditional products, which offer only a basic protection function, to US$376.98 million (RMB2.85 billion). Separately, the insurance regulator is pondering allowing insurers to offer higher interest rates so they can launch more attractive investment-linked products. It is also studying a tax-deferred individual pension program, under which income tax used to buy pension products could be deferred until policy holders claim their benefits years later. This program is bing touted as a way to encourage people to save more for retirement. If successful, the program could be applied across the country.