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Non-life insurers’ growth seen sustained
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China’s continuing urbanization and rising household wealth will sustain the growth of non-life insurers, but their underwriting margins in 2014 will further weaken due to intense rivalry, Fitch Ratings said yesterday.
Property and casualty insurers will continue to suffer from weaker margins in the auto insurance business due to rising acquisition expenses and escalating claims, Fitch said, adding that this sector overall accounts for nearly 70 percent of non-life insurance premium income.
Fitch does not expect car insurers to sharply reduce losses from compulsory third party liability motor insurance due to the China Insurance Regulatory Commission’s tightly controlled pricing system.
“Small insurance companies with limited operating scale and a less diversified portfolio will post weaker operating results in the coming year,” Fitch said in a report. “Major listed Chinese non-life insurers will still maintain positive growth in underwriting surplus, albeit at a slower pace.”
Fitch predicts quality growth for life insurers next year because of their increasing product diversity and greater emphasis on margin improvement.
The Chinese authorities’ removal of the interest rate cap on some guaranteed life products in August and reform measures unveiled after the third plenum of the Communist Party of China seek to encourage life insurers to provide more types of policies to strengthen social security, Fitch said.
Fitch holds a stable outlook for the life and non-life insurance sectors.
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