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Regulatory barriers, intensifying competition and high staff turnover are among the obstacles that could dent the China expansion plans of foreign insurance companies, according to a new study.
About 45 foreign insurers have allied to Chinese partners to set up mainland operations but many are frustrated by restrictions governing joint venture structures, branch locations and product offerings, according to a study by PwC, the professional services firm.
"The foreign insurers believe they continue to be hindered by barriers to market access," said Peter Whalley, PwC assurance partner and co-editor of the study, which is based on interviews with 28 senior executives of foreign-backed ventures operating in China. The ventures have built up a 6% market share in China and foreign insurers project sales growth in life insurance of between 30% to 50% and a rise in sales of property and casualty insurance of between 20% and 40%. Most respondents to the survey believe foreign insurers would achieve 10% market share by 2011.
However, both domestic and foreign insurance companies expect to face stiff challenges from China's powerful banks, which have recently been granted approval to acquire stakes in insurers and are rolling out bank assurance products. The study found that foreign insurers were "unclear on how successfully their products will be allowed to compete with the banks' own proprietary insurance offerings".
American International Group, Aviva, Generali, Prudential and Allianz are the top five foreign insurers in China ranked by premium income. A further 20 overseas insurers are expected to enter the market in the next three years.
Full story in English
News category: China
Published on this site: Sep. 4, 2008
Source:ft.com
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