After years of rapid growth, the Chinese insurance market has entered a transitional phase. After two decades of unprecedented expansion, Chinese insurers and regulators are now focusing on stability and improving risk management.
Although multinational insurers still face many business, regulatory, and cultural challenges in China, there are still real opportunities in this changing market. Notably, there is a burgeoning and underserved middle class that needs a wide range of coverage, from basic property and casualty to life, health, and retirement. Moreover, multinational insurers have real competitive advantages over their Chinese counterparts, particularly in business management, underwriting, product development, claims, technology, distribution and channel management, risk management, financial reporting, and customer service.
That said, time is of the essence. The next five years offer foreign insurers what is probably their last, best opportunity to build and/or solidify their presence in China by:
• Developing a sound business infrastructure, diversified business portfolio, and efficient distribution channels, and
• Effectively influencing and complying with changing regulations.
The companies who best capture the opportunities of this transitional stage will be the ones that enjoy significant long-term success in China in the years to come.