Premium income of firms jumps 18.16% to 3.66 trillion yuan by the end of 2017

Chinese insurers saw profits soar 29.7 percent year-on-year to 256.7 billion yuan ($39.5 billion) in 2017, mainly driven by a handsome investment return from stock market activities, the industry regulator revealed on Monday.

Thanks to structural opportunities, the country's insurers gained 118.4 billion yuan from the capital markets last year, a surge of 355.5 percent on a yearly basis, statistics from the China Insurance Regulatory Commission showed. The investment return on capital hit 5.77 percent in 2017, up 0.11 percentage point from the previous year.

The industry's total premium income jumped 18.16 percent to 3.66 trillion yuan by the end of 2017. The growth rate, however, dropped 9.4 percentage points.

"Last year's tightening regulation has taken effect," said Wang Wei, deputy head of the information department of the CIRC. "The scale of investment-oriented products, mainly universal insurance, has fallen by nearly 50 percent."

The proportion of protection-oriented policies within the life insurance sector hit 47.2 percent in 2017, an increase of 11.1 percentage points on the previous year, indicating the industry is focusing back on the fundamentals of protection.

"We will strive to dispose of and prevent all types of industry risks within three years, focusing on key areas such as capital operations and equity investment, as well as some key companies and processes," said Zhang Zhongning, the regulator's spokesman.

The comprehensive solvency ratio of the whole industry reached 252 percent last year, and no systematic risks occurred, according to the regulator.

"Looking forward, we will further tighten regulations, let the industry play a bigger role in serving the real economy, support green development and help poverty alleviation programs," Zhang said, adding that preventing risks will remain a major concern for the industry watchdog.

In terms of different types of policies, liability insurance witnessed an impressive increase of 438.3 percent, reaching 1 billion policies in 2017.

"That surge is due to favorable government policies and the development of e-commerce. Insurance covering returning bought goods, for instance, rose 52 percent to 1.66 billion policies sold," Wang said.

The country's life insurance sector grew 20.4 percent, while the non-life sector saw a growth rate of 13.8 percent in 2017.

"We are very optimistic about the prospect of the health insurance and pension sector," said Xing Li, an economist with Swiss Re.

China's life insurance premiums are forecast to rise by an average of 15 percent per year in real terms from 2018 to 2019, supported by increasing household income and rising risk awareness, according to a report from Swiss Re.