FOREIGN non-life insurers in China cheered as Vice President Xi Jinping announced the long-awaited opening up of the country's compulsory auto insurance business to them during his US visit.
Foreign property and casualty insurers, which are allowed to set up wholly-owned subsidiaries in China, have long been seeking access to the business to expand their revenue channels in China.
Most foreign insurers are based in Shanghai.
International insurance companies welcomed China's new policy to expand their business portfolio.
"It's very good news and we're willing to take part in the domestic auto insurance market as the world's largest auto insurer and bring our industry experience," Zurich Insurance Company Ltd said in a statement yesterday.
Kevin Goulding, president and chief executive of Chartis China: "We are honored to have this opportunity to participate in the compulsory auto insurance business and Chartis' global experience will favorably contribute to China's auto insurance market, particularly in claims services and safety programs."
China has lived up to its promise while joining the World Trade Organization, introducing more players into the market.
There had long been concerns that foreign insurers' development would have a limited position in the robust Chinese market due to tough regulation and strong competition from local players.
Moody's pointed out in a December report that foreign firms have made little progress in the domestic insurance market and suffer from low profitability and small market share despite significant growth opportunities.
"This will open up some opportunities for foreign insurers but how they will perform will depend on how much they are to invest in the market," Ross Matthews, president of Dazhong Insurance Co Ltd of China, told Shanghai Daily yesterday.
"Some foreign insurance companies have a rich experience for traffic insurance in other countries, but it will take a while for them to set up a service network and bring their expertise to adapt to the local market, so they won't be very challenging to existing players in the market in the short term," Matthews added.
Foreign insurers are allowed to set up wholly-owned subsidiaries in China to run property and casualty insurance businesses and set up joint ventures with at most a 50 percent stake to sell life insurance products.
Source:shanghaidaily