HONG KONG, September 17, 2024–(BUSINESS WIRE)–AM Best has maintained its stable outlook on China’s non-life insurance segment, citing several factors that include a supportive regulatory environment, increased health insurance awareness and strong growth potential in the electric vehicle insurance market.
The Best’s Market Segment Report, “Market Segment Outlook: China Non-Life Insurance,” notes that the segment’s solvency ratios under China Risk-Oriented Solvency System (C-ROSS) stabilised in 2023 and through the first half of 2024, following a decline in 2022. Large Chinese insurers have been able to raise funds from the domestic debt capital market at favourable financing costs by issuing capital supplementary bonds in recent years. AM Best views this move as credit-positive and expects that as the capital market expands over time, investor confidence and risk appetite will grow.
Additionally, premium in the health insurance segment has experienced notable growth, supported primarily by high-deductible, high-limit, medical reimbursement policies, often referred to as “million-yuan policies.” Insurers also have introduced new products with enhanced coverage to meet evolving customer needs, such as tailored protection for subgroups of the population and changes in claims payment structures.
“China’s rapidly aging population is driving significant demand for insurance, and these products have gained significant traction as they offer supplementary coverage for expensive medical procedures and treatments not fully covered by social medical insurance,” said James Chan, director, analytics, AM Best.
The rapid adoption and strong growth in electric vehicle (EV) sales have elevated the demand for EV motor insurance. According to the report, many insurers have been cautious in underwriting EV motor insurance due to higher loss frequency and claims costs, but China’s regulator has given insurers greater flexibility to adjust rates based on differentiated customer risk profiles. This change should encourage insurers to conduct a more-detailed analysis to better assess customer risks.
“AM Best expects large insurers to maintain their competitive advantage by leveraging more-abundant data, greater bargaining power in distribution networks and advanced actuarial analytics for more-accurate pricing and risk differentiation,” said Christie Lee, senior director, head of analytics, AM Best.
China’s economic momentum remains subdued, with consumer demand challenged by an ongoing real estate slump. A prolonged economic slowdown in China could dampen demand for insurance products more closely tied to economic growth such as motor, property and engineering.
To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=346770.
AM Best will participate at the upcoming East Asian Insurance Congress’ (EAIC) Hong Kong Conference, which will take place 24-27 September 2024 at the Hong Kong Convention and Exhibition Center, and will host a reception to celebrate the 25th anniversary of the launch of its Asia-Pacific operations. That event is scheduled 6 p.m. HKT on Wednesday, 25 September 2024, at the Renaissance Hong Kong Harbor View Hotel. For more information about the reception, please visit the event page.
AM Best’s market development team for Asia Pacific also will be exhibiting at and attending the EAIC, including Rob Curtis, CEO & managing director, market development – AM Best Asia-Pacific, Ltd. To arrange a meeting at the conference to learn more about AM Best, its role in the insurance industry and the resources it offers to insurance professionals, including Best’s Credit Ratings, please contact Curtis at robert.curtis@ambest.com.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Contacts
James Chan
Director, Analytics
+852 2827 3418
james.chan@ambest.com
Christie Lee
Senior Director, Head of Analytics
+852 2827 3413
christie.lee@ambest.com
Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
christopher.sharkey@ambest.com
Cynthia Ang
Senior Industry Research Analyst
+65 6303 5026
cynthia.ang@ambest.com
Read More: AM Best Maintains Stable Outlook on China’s Non-Life Insurance Segment