Non-motor lines to propel non-life market
Source: Asia Insurance Review | Aug 2019
Growth in the Chinese non-life insurance market is expected to remain robust this year and next, driven mainly by non-motor lines, says Swiss Re Institute in its latest annual report on the global insurance market.
The report, titled ‘World insurance: the great pivot east continues’, says that overall sector profitability could improve this year, given a stronger equity market, stricter regulation on commission rates and positive impacts from tax reductions.
Non-life premiums rose by 12% in 2018, driven by strong increases in personal accident and health insurance. Motor grew only slowly (3%) as a result of pricing reform and slower new car sales, but it remains the biggest segment (72.4% of non-life premiums in 2018).
Non-motor lines including agriculture, credit and surety and liability insurance saw robust growth last year. However, sector profitability deteriorated, with net income down 26% due to weaker investment returns and a higher loss ratio.
Of 88 non-life insurers, 59 reported underwriting losses. Swiss Re expects non-motor lines to remain the key drivers of growth, while motor will continue to be negatively affected by de-tariffication, as well as the reduction in government subsidies for purchases of new energy vehicles. This could also lead to market consolidation given that larger non-life companies can better adjust to lower motor premium rates and leverage technologies to cut costs.
Meanwhile, the Chinese authorities will continue to lend support to some non-motor lines. One area of focus is health insurance, given the ‘Healthy China’ initiative that was included in the government’s 13th Five-year Plan. A
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