Bancassurance sales slip in July

The nine largest insurers on the Chinese mainland collected 17.74 billion yuan ($2.9 billion) in premium income from sales with their partners in the banking industry during July, down 52.7 percent compared with June, the Securities Times reported Thursday.

The month's sudden drop in premiums from insurance sales at banks - known as bancassurance - was not a shock for many in the insurance industry, Gu Tao, a senior staff member at China Continent Property and Casualty Insurance Company, explained to the Global Times.

"Premium incomes from bancassurance surged in June with the help of temporary strategies. Many insurers try to increase premium incomes in June and December to hit revenue targets and make their half- and full-year financial reports look good," Gu said.

To bolster premium growth when balance sheet pressures loom, insurers often temporarily roll out high-yield policies designed to attract investors, according to experts.

Such investment-grade policies are usually introduced at the end of the first quarter to allow premium growth to percolate through to June, when sales representatives often make one final push just before the close of the first half, the Securities Times wrote.

"High-yield products help insurers bring in more customers, but the costs can be very high. Insurers are cautious about when they offer such policies," said Gu.

Many of China's top insurers - including China Life Insurance, New China Life Insurance, and China Taiping Insurance - stopped selling investment-linked products at the end of June in order to focus more attention on life insurance and other long-term policies that produce more stable cash flows, say experts cited in official media.

Despite the overall drop in premiums from bancassurance, premiums derived from non-investment-grade policy sales using the bancassurance model were up 8.4 percent year-on-year during July, outpacing June's gain of 6.1 percent, industry figures show.