China Life: Micro Insurance for the Poor Harvard Case Solution & Analysis

China Life: Micro Insurance for the Poor Case Solution


China Life is one of the largest insurance provider companies that operates in the Chinese markets and falls under the top ten insurance companies of the world in terms of revenues and margins of the company. The critical advantage that the management of the business enjoys over other sister organizations of the industries of other countries is the share population size and dominance of the company in its home markets.

The business is a state owned and run entity over-dominantly as the majority stakes of the company are owned by the China Life Insurance Corporation. It is government controlled entity which comes under the Finance Ministry of the government of the country. The company offers various multiple insurance policies that range from assets covering insurance to health as well as life insurance to accident insurance.

Problem statement

The primary problem for the management of the organization is to maximize the market presence of the company by developing effective micro-insurance strategies and plans in order to pursue business among the lower middle class and rural population of the company. The focal point of this problem for the management of the company is to diversify the business in this segment of the population of the country while also keeping in mind the business interests in terms of margins from the revenues of the company. Developing an effective strategy and policy for diversifying the business among this segment is critical as many of the rivals of the company are also planning to penetrate this market segment of the country.

China Insurance Industry Analysis and Chine Life’s growth Analysis

It is expected that China’s insurance industry is continuously growing as living standard of the people of the China is growing rapidly therefore China’s insurance industry is also growing along with the increase in living standards, GDP and GDP per capita. It is expected that China’s insurance industry is growing at an annual rate of 23% and China’s insurance market is considered as one of the largest insurance market in the world.

Chinese insurance regulators are also encouraging insurance companies in order to offer micro insurance products to poor population of the rural areas of China. Along with the growth in Chinese insurance industry it is expected that sales revenue and profit margin of the China Life Insurance company is also growing as total revenue of the company increased by 30% from the year 2006 to 2007 and in the same reporting year net profit of the company increased by 95%.

Similarly net profit over sales ratio of the company is also increasing continuously as net profit over sales ratio of the company was just 9.5% in the year 2005 and increase by more than 10% in just two years which shows that there is a significant potential in the industry and management of the company is also performing well in order to attract greater number of customers and in order to attract greater market share as company is generating greater revenue and greater premiums as compared to the other insurance industry that are operating in same region.

Development of the Micro insurance program

It is expected that in the year 2008 China Insurance Regulatory Committee designed a rural micro life insurance plan in order to provide suitable and feasible insurance products to the low income population of the rural areas. For this purpose China Insurance Regulatory Commission proposed a pilot plan and in observance with the requirements of insurance regulatory authorities, China Life Insurance Company proposed nine different insurance products................

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