China's insurance industry will experience significant development amid new regulatory reforms, Dagong Europe, the branch of China-based Dagong Global Credit Rating Co Ltd in Europe said in a commentary released on Tuesday.
The Milan-based agency expected the Chinese insurance market to increase at around 15 percent in 2014-2015, with health and non-life businesses expanding faster than the life business.
China's insurance industry has been growing even faster than gross domestic product (GDP) at a compound annual growth rate of 16.5 percent over the last decade.
"China's insurance industry is the only developing market among the global leaders that still promises huge growth opportunities," Director of Financial Institutions Analytical Team at Dagong Europe Linas Grigaliunas said.
The agency's estimates were based on "a number of relatively static factors, such as low penetration, low density and large population, and dynamic factors such as fast economic development, accelerating social and technological progress, and economic growth focused policies," he noted.
According to Dagong Europe's analysts, industry regulation and various government incentives have been both the most important driver for growth and the main source of challenges for local and foreign insurers.
"We expect that the speed of growth and scale of China's insurance industry will be highly dependent on the upcoming regulatory reforms," Head of Financial Institutions Analytical Team at Dagong Europe Carola Saldias said.
The commentary highlighted the liberalization of merger and acquisition (M&A) rules, the opening of the motor third party liability line and the setting up of the China (Shanghai) Pilot Free Trade Zone with fewer restrictions for foreign players among the milestones achieved to promote the insurance market's opening.
Though complexity and protection of domestic insurance players remain "major issues," China's authorities were committed to enhance the insurance market through reforms and the help of foreign players. Thus the opening of the market "should accelerate in the medium term," Saldias added.
The agency's analysts expected that M&A activity and an increased level of market consolidation following the regulatory liberalization will result in a faster growth of the foreign insurers' market share, especially those with European origin ownership.
Source China Daily
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