China’s general insurance market is set to grow at a CAGR of 7.2%, with direct written premiums rising from US$212.1 billion in 2021 to US$304.4 billion in 2026, research by GlobalData has revealed.
The data and analytics firm said that the Chinese general insurance industry is expected to recover in 2022 and continue its growth trend over the next five years. In 2022, the market suffered from a low growth rate of 0.7% due to lower vehicle sales causing a decline in motor insurance uptake. This was a result of supply chain disruptions and stringent lockdowns in the major manufacturing hubs of Shanghai and Changchun.
“The low growth in 2021 was primarily attributed to strict lockdowns due to China’s zero-COVID policy,” said Shabbir Ansari, senior insurance analyst at GlobalData. “Lower vehicle sales also impacted general insurance growth as motor insurance accounts for more than 50% of general insurance premiums.”
Motor insurance made up 56.8% of China’s general insurance direct written premiums in 2021. GlobalData said the segment is expected to recover over the next couple of years, as automobile sales are likely to be boosted by the proposed extension of subsidy for electric vehicles till 2023. Electric vehicles accounted for almost 20% of total vehicles sold in China in 2021.
“The expected increase in the sales of electric and hybrid vehicles, which have 20% higher premium compared to internal combustion engine vehicles, will help the motor insurance segment to recover from 2023 to grow at a CAGR of 2.4% over 2021-2026,” Ansari said.
Personal accident and health insurance was the second-largest general insurance line in China, with a 14.7% share of DWP in 2021. This line of insurance is expected to continue its double-digit growth over the forecast period, driven by raising awareness over protection and financial planning due to recurring COVID-19 waves.
Property insurance was the third-largest line, with a 12.7% share of general insurance premiums in China in 2021. Property is expected to grow at a CAGR of 12.4% from 2021 to 2026, driven by the Chinese government’s plans to invest more than US$1 trillion in infrastructure projects. These projects, which include high-speed rail networks, renewable energy projects, and water tunnels, are expected to be completed by 2030 and will provide a boost to the property insurance segment.
The remaining 15.8% share is composed of liability, financial lines, marine, aviation and transit, and miscellaneous insurance lines.
“The expected recovery in automobile sales, growing health awareness and increased investments in infrastructure projects will support general insurance growth in China,” Ansari said. “However, rising inflation will increase the cost of claims impacting profit margins of insurers.”
