KUALA LUMPUR, Sept 7 (Bernama) -- Global credit rating agency, AM Best has maintained its stable outlook on China’s non-life insurance segment, citing improved regulatory oversight, new growth opportunities and ongoing digitalisation and innovation.
The Best’s Market Segment Report, “Market Segment Outlook: China Non-Life Insurance”, said that enhanced regulatory oversight, particularly for non-motor lines such as property and liability, is expected to support pricing discipline, strengthen distribution practices and promote prudent market conduct.
New growth opportunities are also emerging from initiatives under the nation’s latest five-year plan, which focuses on technology finance, green finance, inclusive finance, pension finance and digital finance, as well as the expanding Chinese Interest Abroad business, despite moderating gross domestic product (GDP) growth and slower premium growth in traditional non-life business.
“For Chinese Interest Aboard business, while expansion may enhance China non-life insurers’ geographical diversification over time, it is important to note that insurers could also be exposed to unfamiliar risks that require advanced underwriting skills and robust risk management systems to protect against large financial losses,” said AM Best associate director, analytics, Lucie Huang in a statement.
Meanwhile, its director, analytics, James Chan said the industry’s priorities are increasingly shifting towards sustainable profitability and operational efficiency, supported by accelerated digitalisation and innovation.
“Beyond traditional reinsurance support, they are also adopting proactive risk reduction measures to better manage exposures, while enhancing the client experience and improving post-disaster response,” he said.
The report said investment returns have driven the China non-life segment’s bottom line, while underwriting margins remain thin amid intense competition.
Although underwriting profits are largely concentrated among large insurers that benefit from economies of scale, some smaller local insurers have achieved favourable underwriting margins by focusing on niche market segments.
At the same time, concerns over China’s economic momentum have emerged amid lower GDP growth forecasts, prompting insurers to shift their focus from top-line growth to bottom-line protection and operational efficiency.
-- BERNAMA