By Rob Starr, Content Manager, Big4.com
According to the PwC Foreign Insurance Companies in China 2012 Survey Report, 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.
“Optimism among foreign insurers belies the continuing challenge they face in trying to build market share in China,” says Peter Whalley, PwC Insurance Leader for Hong Kong. “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 according to PwC. 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.
A surprising aspect of the report finds that a majority of foreign insurers do not believe they have the right people in place to deliver on their current strategy. The most commonly expressed concern centred on a shortage of staff with 20 years or more experience. Twenty-six of the 30 respondents asked believe that talent shortage will have a considerable impact on their top line growth over the next three years.