Foreign insurers' market share remains low: Study
Updated: 2011-12-06 07:58
By Hu Yuanyuan (China Daily)
According to experts, competition with domestic insurers, such as People's Insurance Company of China Holdings Co, and a shortage of talent are the greatest barriers for foreign insurers. Keith Bedford / Bloomberg
BEIJING - More than half of the foreign life insurance companies operating in China estimate that their business has grown 20 to 40 percent in 2011, but their market share is expected to remain low, PricewaterhouseCoopers (PwC) said in a report released on Monday.
According to the survey, which covers 28 foreign insurers, only one company expects to grow at a rate below 20 percent through 2014, with more than half of the participants estimating 20 to 40 percent growth this year.
On the property and casualty side, nine respondents said their growth this year will fall into a range of 15 to 75 percent, and this pace of growth is expected to continue in the next three years.
The market share of the foreign insurers, however, hasn't moved much, with life insurers hovering at 5 percent and property and casualty insurers at 1 percent - the lowest in Asia.
The figures are not expected to change dramatically in the next three years, according to the survey.
Hao Yansu, dean of the School of Insurance at the Central University of Finance and Economics, said localization was the biggest hurdle foreign insurers faced in attracting Chinese customers.
"When foreign insurers entered China's market, they believed that they could easily copy their products and management philosophy in the country. But it was not true, as proved by a decade's experience," Hao told a Sohu forum focusing on the insurance sector.
According to Tom Ling, PwC insurance leader for China, competition with domestic insurers and banks and a shortage of talent are the greatest barriers for foreign insurers.
"Besides operating in a constantly evolving environment, they have to contend with the increasing dominance of domestic insurers and with banks encroaching into their traditional marketplace," said Ling.
But the announcement in May that foreign insurers will be allowed to enter the mandatory third-party liability market might expand the pie for property and casualty companies, Ling added.
Despite the challenges, foreign insurers still see China as a crucial market.
"Selecting the right business model to capture China's growth potential will be key," said Alex Wong, PwC China financial services partner.
"Some foreign insurers are particularly looking forward to the increasing internationalization of the renminbi, a move they believe will mean a better chance to differentiate themselves by encouraging greater product innovation and providing better hedging opportunities," Wong added.
(China Daily 12/06/2011 page17)