GlobalData: China’s insurance market poised for new highs
GlobalData: China’s insurance market poised for new highs | Insurance Business Asia
Insurance News
GlobalData: China’s insurance market poised for new highs
Motor expected to dominate
Insurance News
By
Kenneth Araullo
The Chinese general insurance market is projected to expand significantly in the coming years, according to the latest figures from GlobalData.
Gross written premiums (GWP) are expected to rise from CNY1.6 trillion ($237.2 billion) in 2023 to CNY2.3 trillion ($361.0 billion) by 2028, reflecting a compound annual growth rate (CAGR) of 7.4%.
Analysis from the firm’s insurance database indicates a growth trajectory for China’s general insurance sector, with a predicted increase of 7.7% in 2023 and 6.9% in 2024. This growth is attributed to factors such as rising vehicle sales, increased investment in infrastructure projects, favourable regulatory changes and a surge in health insurance demand post-pandemic.
General insurance segmens in China
Motor insurance
Motor insurance remains the dominant segment within the general insurance market, predicted to represent 54.4% of the GWP in 2023. However, according to GlobaData, there has been a noticeable shift from the 71.0% share in 2017, as insurers diversify their portfolios and lessen their dependence on motor insurance.
The motor insurance sector is forecasted to grow by 6.1% in 2023, bolstered by an 8% increase in vehicle sales from January to August 2023, as reported by the China Association of Automobile Manufacturers (CAAM). Government strategies, including tax reductions on small-engine vehicles and extended subsidies for electric vehicles (EVs) until 2027, are expected to further fuel this growth.
Electric and hybrid vehicle sales have also contributed to the motor insurance sector’s expansion in 2023. These vehicles typically attract higher insurance premiums compared to traditional internal combustion engine vehicles. Regulatory changes in January 2023, which adjusted premium pricing coefficients for commercial motor insurance, are anticipated to foster competition and growth in this segment. The motor insurance market is expected to achieve a CAGR of 4.5% between 2023 and 2028.
Property insurance
According to the data, property insurance is the second-largest segment in the general insurance market, accounting for 15.1% of the GWP in 2023. The construction industry in China, poised for an average annual growth of 6.5% from 2024 to 2027, along with substantial government investment in infrastructure projects, is set to propel the property insurance sector forward.
Property insurance is projected to grow at a CAGR of 12.2% from 2023 to 2028.
Agricultural insurance
The agriculture sector, another significant contributor to China’s economy, is expected to boost the property insurance market. Agricultural insurance alone is forecasted to grow by 22.2% in 2023, according to GlobalData, driven by increasing instances of extreme weather conditions.
Personal accident and health insurance
Personal accident and health (PA&H) insurance constitutes the third largest segment, representing 14% of the GWP in 2023. This sector, according to the data, is expected to grow by 3.7% in 2023, primarily due to heightened health insurance demand following the pandemic and rising medical costs attributed to inflation.
Other insurance segments
Other areas such as liability, financial lines, marine, aviation, and transit (MAT) and miscellaneous insurance make up the remaining 16.5% of the general insurance GWP in 2023.
GlobalData’s analysis concludes that while favourable regulatory changes and government initiatives are likely to support the growth of China’s general insurance industry, challenges such as global economic and geopolitical uncertainties could pose significant risks to the sector over the next five years.
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