Rapid economic growth and increased income in China have increased the country's need for insurance, adding to the importance of information technology for insurers, according to a new report from the research and advisory firm Celent.
Reform of the pension and medical insurance systems also has provided a broad base for the development of commercial insurance, the researcher noted in the report, "China Insurance Market and Technology Overview 2008."
"Insurance companies in China have increasingly recognized the importance of information technology in improving the competitiveness of enterprises and have subsequently invested a greater amount of resources in IT spending," said Celent. "It is expected that from 2008 to 2010, China's insurance market will experience sustained and rapid development, with a high-speed annual growth rate of around 20 percent."
The report examines the Chinese insurance market's overall development trends and operations and analyzes insurance companies' information technology investments, the company said.
According to the report, China's property insurance market concentration is very high, with People's Insurance Company of China (PICC) occupying 40 percent of the market. The top five insurance companies occupy 76 percent of the entire property market.
"Most of China's insurance companies are still in the infrastructure-oriented construction stage of development," said Celent senior analyst Wenli Yuan, author of the report. "Investments in hardware, wide area networks, and Internet access, telephone, and other communications infrastructure accounted for more than 50 percent of firms' total investment in information technology.
"Improving business processing systems, data warehouses, business intelligence and customer relationship management will be the focus of future IT investments," she added.
Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies.
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