HONG KONG, Nov 29 (Bernama-BUSINESS WIRE) -- AM Best is maintaining a stable outlook on China’s non-life insurance segment given the growth momentum in the motor and non-motor segments, as well as the domestic economic recovery following removal of pandemic-related restrictions, partially offset by a weaker 2024 economic outlook. The Best’s Market Segment Report, “Market Segment Outlook: China Non-Life Insurance,” also notes the industry’s solvency position remains robust, albeit with higher capital requirements under C-ROSS Phase II. The recent relaxation of C-ROSS solvency-related investment rules is expected to boost the non-life segment’s solvency position slightly. China’s non-life market posted a net profit of CNY 44.5 billion in the first nine months of 2023, down by CNY 7.4 billion from the same prior-year period. The drop in net profit was attributed to underwriting pressures and catastrophic events; the industry’s investment returns remain the main contributor to overall earnings. At the same time, total direct premiums written (DPW) rose by 7.3%, to CNY 1.2 trillion (USD 166.4 billion) in the first nine months of 2023. The motor segment has shown strong growth momentum, with premiums expanding by 5.8% in August and by 5.6% in September, compared with the same periods last year. Another significant trend is the exponential growth in electric vehicle sales, which has led to rising demand for motor insurance. “While insurers are looking to tap into the opportunities offered by the electric vehicle segment, it should be noted that repair and servicing costs are higher than that of gas-powered vehicles due to expensive parts and a shortage of qualified repair and maintenance technicians,” said Lucie Huang, senior financial analyst, AM Best. “Moreover, the lack of claims history, combined with differences among electric vehicle manufacturers, poses a challenge to accurate pricing and risk assessments.” According to the report, non-motor lines of business will likely be the main drivers of future premium growth. Smaller insurers have been looking to capture growth opportunities in the health insurance segment to meet the demand in supplementary medical protection not covered in the current social medical scheme. Additionally, agriculture insurance, which holds a DPW share of 10% for the first three quarters of 2023, has become increasingly important to the non-life industry as a risk mitigation tool against natural catastrophe events and price fluctuations. AM Best expects that non-motor lines will fuel development of China’s non-life market over the medium term. To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=338068. AM Best is a global credit rating agency, news publisher and data analytics provider specialising 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 © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED. View source version on businesswire.com: https://www.businesswire.com/news/home/20231128732253/en/ Contact Lucie Huang Senior Financial Analyst +852 827 3414 lucie.huang@ambest.com Christopher Sharkey Associate Director, Public Relations +1 908 882 2310 christopher.sharkey@ambest.com James Chan Director, Analytics +852 827 3418 james.chan@ambest.com Cynthia Ang Senior Industry Research Analyst +65 6303 5026 cynthia.ang@ambest.com Christie Lee Senior Director, Analytics +852 827 3413 christie.lee@ambest.com Source : AM Best |
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