Tough regulations and strong competition from domestic insurers will combine to slow the expansion of foreign insurance companies in the robust Chinese market over the next three years, according to an industry survey yesterday.

The PricewaterhouseCoppers survey revealed that the biggest challenge facing foreign life insurers are rising competition from their domestic counterparts and the fight for talents while China's tight regulatory environment is the top concern for property and casualty counterparts.

Peter Whalley, PwC insurance leader for Hong Kong, said that foreign insurers are dismayed by the limited number of insurance companies being allowed to distribute their products through the bancassurance channel. "While this (channel) may benefit companies with a good partnership with banks, others, particularly the smaller insurers, may lose out," he said.

Foreign insurers may take a 3.7 percent share in the life insurance sector in 2011, and 1.1 percent in the property and casualty market. Their market share may remain stagnant in the next three years when China's insurance market is likely to boom.

Seven life respondents estimated premiums to rise 50 percent by 2014, and the majority of property and casualty insurers projected annual premium growth at between 15 and 50 percent in the next three years.

But the foreign insurers said they will not quit the market and noted that wider usage of the yuan globally may help them lift market share by developing more products and opening investment opportunities.

The survey, done in August and September, was based on interviews with senior executives of 28 foreign insurers with branches in China.