According to GlobalData, the Chinese general insurance market is set to grow at a compound annual growth rate (CAGR) of 7.2% from CNY1,367.7bn ($212.1bn) in 2021 to CNY1,943.1bn ($304.4bn) in 2026, in terms of direct written premiums (DWP).
Despite registering a low growth of 0.7% in 2021 due to a decline in motor insurance, GlobalData suggests that the Chinese general insurance industry is expected to recover in 2022 and continue its growth trend over the next five years.
Shabbir Ansari, Senior Insurance Analyst at GlobalData, commented, “The low growth in 2021 was primarily attributed to strict lockdowns due to China’s zero-COVID policy.
“Lower vehicle sales also impacted general insurance growth as motor insurance accounts for more than 50% of general insurance premiums.”
In the Chinese general insurance market, motor insurance was the largest line, accounting for 56.8% share in terms of DWP in 2021.
GlobalData adds that the segment is expected to recover from 2023 as automobile sales are expected to improve due to the proposed extension of subsidy for electric vehicles till 2023. Electric vehicles constituted nearly 20% of total vehicles sold in China in 2021.
Ansari said, “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 2021-26.”
Personal Accident and Health (PA&H) insurance was the second largest general insurance line in China, accounting for a 14.7% share in terms of DWP in 2021.
GlobalData expects that the increased awareness of protection and financial planning due to recurring COVID-19 waves will drive PA&H insurance to continue its double-digit growth over the forecast period.
Ansari added, “Rising medical costs will drive premiums, which will also support the growth of PA&H insurance. As a result, PA&H insurance is forecast to grow at a CAGR of 15.6% over 2021-26.”
Property insurance was the third-largest line, accounting for a 12.7% share of general insurance premiums in China in 2021.
Property Insurance is expected to grow at a CAGR of 12.4% during 2021-26, which GlobalData observes will be driven by the Chinese government’s plans to invest more than $1 trillion in infrastructure projects, including high-speed rail networks, renewable energy projects, and water tunnels.
Ansari concluded, “The expected recovery in automobile sales, growing health awareness and increased investments in infrastructure projects will support general insurance growth in China. However, rising inflation will increase the cost of claims impacting profit margins of insurers.”
Liability, Financial Lines, Marine, aviation and transit (MAT), and Miscellaneous insurance accounted for the remaining 15.8% share in 2021.
