HONG KONG--(BUSINESS WIRE)--Life insurers in Asia’s largest markets have seen a slowdown in growth—with an outright decline in China—amid continued economic uncertainty and strengthening of regulation, according to a recent report by A.M. Best Co. Meanwhile, low interest rates and volatile financial markets have cut into profitability. Still, life insurers are looking ahead to the opportunities arising from aging populations and new products and markets.

The four countries examined in this report underscore the diversity of the Asia-Pacific region’s life markets, from the still developing potential of China and India, to the rising powerhouse of Korea, to the more mature, saturated business environment of Japan. Companies in the faster growing markets face the temptation to take excessive risk in pricing and underwriting, and the development of sales channels tends to be a work in progress.

• Life insurance premiums in China, excluding accident and health businesses, recorded a 10% drop to RMB 870 billion in 2011 from RMB 968 billion in 2010.
• Group life insurance has shown explosive growth in India in recent years, while individual sales have followed an unsteady trajectory (group sales were up 56% and 57%, respectively, in the financial years ended March 31 2011 and 2010).

• In 2012, life insurance premium in Japan is expected to continue to grow, albeit at a moderate pace, while profitability is expected to remain weak because of continued unfavorable financial market conditions.
• The Korean life insurance market is expected to show mild growth for 2012 amid sluggish growth in gross domestic product, low interest rates and weak stock markets, accompanied by tightening consumer-protection regulations.

“With a large proportion of the population of India being in low income, rural areas and little understanding of the complexities of insurance coverage have driven the demand for microinsurance products,” said Jeff Yeung, senior financial analyst, A.M. Best Asia-Pacific. “Designing microinsurance policies is not simply reducing the price and benefits of existing insurance policies, but addressing the needs of this group of insurance customers.”

To access a copy of this special report, please visit www.ambest.com/press/062805asiapacificlifereport.pdf.

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