China's life insurance market has taken a big step forward in its scientific approach to management and standardisation with policy premiums based on an official mortality table.
The recent order by the country's chief financial regulator, the People's Bank of China, that life insurers base their premium calculations for new policies on the country's first life insurance mortality table, became effective from June.
The industry has been concerned about the fairness and transparency of premium calculation.
Deputy general manager of the Tai Ping Life Insurance's Hong Kong branch, Li Zhenghuai , said: 'We need to have a standard mortality table if we are to strengthen the supervision and self-discipline in the industry.' The premium calculation based on the new mortality table would be more reasonable and scientific, he said.
Mr Li is the former head of the actuarial department of mainland insurance monolith People's Insurance Company of China, the parent of Tai Ping, responsible for compiling the table.
The table was completed last year, based on an observed period between 1990 and 1993, and laid the foundation for the development of the life insurance actuary system in China, he said.
Based on more than eight million policies, the study showed the average life expectancy of a man was 73.6 years and 77.7 years for a woman.
