General insurance industry in China to reach US$313.0bn in 2025, forecasts GlobalData
The general insurance industry in China is projected to grow from CNY1.36 trillion (US$196.8bn) in 2020 to CNY2.13 trillion (US$313.0bn) in 2025, in terms of direct written premiums (DWP), forecasts GlobalData, a leading data and analytics company.
As per the latest data from GlobalData, the general insurance industry in China is expected to grow at a compound annual growth rate (CAGR) of 9.5% over 2020-2025. However, the forecast remains shadowed by regulatory changes, the ongoing economic challenges and the resurgence of the COVID-19 pandemic.
Deblina Mitra, Senior Insurance Analyst at GlobalData, comments: “Despite being the second-largest general insurance industry globally, China’s general insurance penetration at 1.3% is way below the developed markets’ average of 4%. This is mainly because the general insurance industry’s growth is disproportionately reliant on motor insurance, which has been negatively impacted by the regulatory restrictions, economic as well as pandemic related challenges in the recent years.”
Motor insurance was the largest insurance line accounting for 60.7% share of the general insurance DWP in 2020. It recorded a flat growth of 0.7% in 2020 due to changes in regulations, which lowered mandatory motor liability premium prices by up to 50%. Decline in vehicle sales due to lockdown restrictions also impacted premium in 2020. Motor insurance is expected to record a growth of 6% in 2021 and 2022.
Personal accident and health (PA&H) and property insurance were the second and third-largest general insurance lines with a share of 12.2% and 11.3%, respectively, in 2020.
PA&H insurance provided by general insurers recorded the highest growth of 21.2% in 2020 and benefitted from the rising medical expenses and tax exemptions. This insurance line is expected to maintain double-digit growth in 2021 and 2022.
Property insurance also recorded a strong growth of 14.0% in 2020 and was majorly driven by agriculture insurance which accounted for over 50% of the property insurance DWP that year.
Government subsidies on premium prices and insurance to cover frequent Nat-cat losses supported the growth of agriculture insurance in China. New product development initiatives such as the recently proposed grain insurance are expected to enhance the coverage of agriculture insurance over the coming years.
Overall, property insurance is expected to grow by over 11% in 2021 and 2022. Along with the growing insurance demand from agriculture industry, insurance to cover large-scale ongoing projects – one-belt-one-road and renewable energy, will aid the growth.
Ms. Mitra concludes: “Growth in the general insurance industry over the coming year will be hinged on its non-motor lines of business as motor insurers’ profitability will remain challenged with the stressed automobile sector battling supply chain issues, regulatory restrictions on premium pricing and new pandemic outbreak.”