China Life Insurance, the country's largest life insurer, plans a sales push into the outlying rural areas with products tailor-made for the greenfield market of under-serviced rural customers. China Life already commands 80 per cent of rural markets such as Dunhuang, an ancient Silk Road city in Gansu province. But the company faces increased competition in such marketplaces and their agrarian hinterlands because the government has urged more insurers to reach into the rural areas as part of its strategy to reform the financial sector in remote regions. In August, the Beijing-based insurer introduced a rural insurance scheme now on trial that offers farmers health and life insurance protection at lower premiums than those that are paid in urban areas, and therefore offering lower rates of cover. The scheme seems to have been well received by farmers. 'We have provided them with insurance at lower premiums and that are sold by qualified agents, which are the keys to a deeper and broader penetration in the countryside,' he said. The qualified agents, said Mr Wang, were members of village associations and therefore maintained close links with villagers. 'Our rural sales teams consist mainly of these members of associations who have a network with local residents. Many have been helpful in the past and have thus already gained trust in the community,' said Bai Yanjun, a sales agent at a China Life representative office in Huangqu Field, north of Dunhuang. Mr Bai said that of the 31 China Life sales agents in the village, each could earn an average of about 8,000 yuan (HK$9,081) per year, which was more than double the average income of farmers. With the support of the industry regulator, China Life aims to extend its rural reach to cover 3 million people in the remote areas by December. It has selected nine provinces - Gansu, Guangxi, Shanxi, Hubei, Henan, Sichuan, Heilongjiang, Jiangxi and Qinghai - for its pilot projects before expanding countrywide. Analysts said the 'early-bird' start by China Life into untapped rural markets could make it harder for future competitors to chip away its market share. 'The sales mix in rural areas is more focused on risk-type insurance products, which is relatively high-margin compared with products sold in urban areas,' said Olive Xia, an analyst from Core Pacific-Yamaichi International. 'But some products are somewhat like providing social security in rural areas in order to build a harmonious society, and hence lower margin.' According to estimates from HSBC Holdings, China Life collected about 30 per cent of premiums from the rural areas. Still, the insurer is struggling to turn this business into profits. State-owned China Life initially billed its rural push as a corporate social responsibility programme but it believes it will become lucrative in the long term as living conditions improve in the vast rural areas of China that support a population of about 800 million.