By Rob Starr, Content Manager, Big4.com
Foreign life insurance companies in China expect to grow by up to 30% in the next three years. Low penetration (2%) in the insurance market, strong upside for premiums, and the relative strength of China’s economy is driving this sentiment, according to PwC’s Foreign Insurance Companies in China 2012 Survey Report.
Projecting ahead, survey respondents expect modest growth of their slice of China’s insurance market. Foreign life companies expect their share to increase to around 5% by 2015, while foreign P&C insurers believe their share will remain the same in three years. These figures are significantly lower than the 10% – 20% share life insurers were forecasting when surveyed in 2007.
Peter Whalley, PwC Insurance Leader for Hong Kong comments:
“Optimism among foreign insurers belies the continuing challenge they face in trying to build market share in China,” he says. “The 27 foreign life and 21 P&C players only hold a 4.3% and 1.2% share respectively of the Chinese insurance market in 2012.”
The life industry is experiencing major realignments in its distribution channels. In 2012 more than half of respondents believe there is a continuing trend towards bancassurance. The recent “three company” rule imposed by the China Banking Regulation Commission has significantly impacted foreign life insurers. The rule places limits on the sale of insurance products in bank branches to just three insurers (which often includes the bank itself). Also, insurance companies are no longer allowed to station their own sales representatives in the banks, passing control of insurance product sales to bank employees.