Analysts at RBC Capital Markets have observed strong growth among foreign insurers in the Chinese market, in contrast to local players who have seen volumes stagnate.
And RBC expects to see a continuation in this shift, noting that insurers who grew their share of the market during the pandemic were able to introduce multiple new products at high speed and sell them through new virtual distribution channels, backed by regulators.
Prudential was one of the standout insurers for growth, increasing sales by 30% and new business profit by 65%, according to RBC, in contrast to the lacklustre performance in the market as a whole.
Looking ahead, its expected that the regulator will further lower barriers to entry for foreign insurers, and growth will likely be boosted by low insurance penetration and a growing middle class and bancassurance channel.
However, premium growth has lost its momentum after a strong start to the year, ending the six-month period relatively flat at 0.3% growth.
This was after volumes climbed 11% in January and then 17% in February, before unexpectedly falling from March onwards due to lower sales of critical illness and lower sales through agents.
RBC partly attributes the stagnation of Chinese insurers to a regulatory move in 2017 that curbed the sale of short-term investment focused contracts, which caused the persistency ratios of listed insurers to deteriorate.
In April this year, the regulator also announced policies to restrict certain sales practices in the life and health sector, which will be a headwind for top line growth but hopefully improve profitability over the longer term.