China has grown to become the world’s third-largest insurance market, with annual premium of 2.4 trillion yuan ($518 billion) last year, according to state-run news agency Xinhua.

Data from the China Insurance Regulatory Commission shows the market had premium of 1.3 trillion yuan ($281 billion) five years ago, when it was ranked sixth-largest.

The industry made a net profit of 282.4 billion yuan ($61 billion) last year, up from 83.7 billion yuan ($18.1 billion) in 2010.

The market has grown rapidly in recent years as China makes the transition to a more developed economy in which coverage takes on greater priority among consumers and the commercial sector.

Industry giants such as Munich Re have predicted the Asian powerhouse will eventually supplant Japan as the second-biggest insurance market, behind the US.

Fears the Chinese economic engine may no longer produce double-digit growth will not affect the industry, Munich Re says.

“Despite the expected economic slowdown, we still see huge catch-up potential of the Chinese insurance market,” Chief Economist Michael Menhart told insuranceNEWS.com.au.

“Insurance penetration is still low, with 3.6% total insurance market premium in relation to GDP.”

In its Insurance Market Outlook for 2015, the German reinsurer estimated that China ranks fourth in 2015 with premium volume of €272 billion ($426 billion) and will rise to €715 billion ($1.1 trillion) in 2025, to be the biggest market in Asia and second worldwide.

It ranks the UK as third last year, slipping to fourth by 2025.

Japan was second last year with premium volume of €389 billion ($609 billion), but is expected to slide to third by 2025 at €506 billion ($792 billion).

US premium volume is projected to grow from €918 billion ($1.4 trillion) last year to €1.32 trillion ($2.1 trillion) in 2025.