- Advances in Chinese Economic Studies series
Shuji Yao, Zhongwei Han and Dan Luo
2. 2.1 China’s insurance market – development issues HISTORY OF CHINA’S INSURANCE INDUSTRY 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. Until the middle of the twentieth century, China’s insurance market was dominated by foreign insurers, and insurance business was conducted primarily to support foreign trade (D’Arcy and Xia, 2003). The People’s Insurance Company of China (PICC) was established in 1949, the year that China was liberated by the Chinese Communist Party. From 1949 to 1958, the insurance industry experienced a process of nationalisation and, as a result, the PICC became the only insurance company in the country, with 600 offices and 50 000 employees. Foreign insurance companies completely withdrew from China in 1952. In the next two decades, the insurance business virtually disappeared because of the establishment of the people’s communes. It was thought that organisations and individuals could be well protected by the central government so that insurance was no longer needed (Chen and Shih, 2004). Between 1979 and 1995, the Chinese insurance industry experienced a period of revitalisation. The State Council approved the revival of domestic insurance operations in 1979. The PICC restored its business operations, including various types of casualty insurance, life insurance, liability insurance, credit insurance, agricultural insurance and reinsurance. The PICC was the only authorised insurer until 1988, when China Merchant Steam...
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