Advances in Chinese Economic Studies series
Shuji Yao, Zhongwei Han and Dan Luo
The history of modern insurance in China is relatively short. In 1805, the first foreign insurance firm, the Canton Insurance Society, was established by British and Indian businessmen in Guangzhou. Seventy-one years later, the first Chinese domestic insurance company was founded. The Chinese insurance market was dominated by foreign insurers until the mid-twentieth century, and the primary objective of the insurance business was to support foreign trade. In 1949, the People’s Insurance Company of China (PICC) was established, and the following ten years saw the nationalisation of the Chinese insurance industry. After reorganisation, PICC became the only insurance company in China, with 600 offices and 50 000 employees operating nationwide. Meanwhile, foreign insurers were completely excluded from China. In 1979, the State Council approved the revival of domestic insurance operations, and the Chinese insurance industry experienced a period of rapid development in the following two decades. The PICC restored its business operations, including various types of casualty insurance, life insurance, liability insurance, credit insurance, agricultural insurance and reinsurance. It was the only authorised insurer till 1988 when China Merchant Steam Navigation formed the Ping An Insurance Company, followed by the China Pacific Insurance Company and Xinjiang Agricultural Insurance Company in 1990. Since then, domestic competitors have entered the market, challenging the monopoly power of PICC. In March 1995, the China People’s Banking Law was implemented, establishing supervisory mechanisms for the financial sector and providing a legal basis for supervision of insurance companies. Later, in June, the Insurance Law was enacted,...