Regulatory crackdown helping foreign insurers gain ground in China
HONG KONG: Foreign insurers are quickly gaining market share in China, aided by a regulatory crackdown on short-term investments packaged as insurance that has hurt many of their local rivals.
The growth of China's middle class and their rising wages have meant that more people are looking for insurance, said Asia-focused AIA's regional chief executive, Mr John Cai, who leads the company in China and some South-east Asian markets.
"We have the differentiated strategy by focusing on selling protection products... and we reaped the benefit of that," he said, referring to a 60 per cent jump last year in the Hong Kong-based company's value of new business in China, up from a growth rate of 54 per cent in 2016.
Foreign insurers, including AIA Group, Aviva and Prudential have been in China for decades, but their collective market share is still below 10 per cent as a result of regulatory restrictions and limited awareness about insurance as coverage rather than an investment.
Current rules limit foreign holdings in Chinese insurance joint ventures to 50 per cent.
AIA is the only wholly owned foreign insurance firm in China as its operations were set up before the restrictions were introduced.
Beijing said last year it planned to lift the ownership cap to 51 per cent for foreign insurance joint ventures in 2020 and remove the limit completely two years later, which would allow for further expansion. - REUTERS