Foreign Insurers Stuck in the Bleacher Seats

It would be interesting to learn exactly why foreign insurance companies have ended up in the bleachers of the Chinese insurance game – and why they apparently have given up on being able to get better seats.
PricewaterhouseCoopers recently surveyed 31 foreign insurance companies that have operations in China. And PWC found that they have largely given up on getting any significant share of the China market. Looking ahead to 2013, the companies told PWC that they expect their market share to remain at its current 5%. In a survey two years ago, the foreign insurers were much more optimistic. At that time they told PWC they expected to reach 10% market share by 2011.

In this year’s survey, the foreign insurers also said that some of them expect to be leaving the market as their Chinese joint-venture partners – a requirement for foreign insurance companies – want to get out of the industry. One reason is their paltry market share. The other is that cash-loaded Chinese banks are getting into the business. It would be a fascinating to examine how the mix of China complying with its WTO obligations, regulators imposing various roadblocks and missteps by the foreign insurance companies resulted in this pathetic market share.

The quest for Chinese insurance licenses was a well-funded obsession of the globe’s biggest players in the 1990s. Zurich, Chubb, New York Life, Prudential and dozens of others spent huge amounts of money making friends with the Chinese government to obtain licenses. They trained thousands of Chinese insurance regulators and practitioners – basically the entire industry — and hosted them for elaborate global fact-finding tours. They also sponsored everything from radio shows to golf tournaments to wine tastings to symphonies and operas and stage plays in China.

For those of us who were able to partake in this largess, it was fun while it lasted. (The golf tournaments in Beijing staged by Chubb’s Ian Lancaster are legendary.)

The link: http://tinyurl.com/2dgfovm

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About James McGregor
James McGregor is an American author, journalist and businessman who has lived in China for more than 25 years. Currently, he is chairman of APCO Worldwide, Greater China. A professional speaker and commentator who specializes in China’s business, politics and society, he regularly appears in the media to discuss China-related topics. McGregor is the author of the books "No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism" (2012) and "One Billion Customers: Lessons from the Front Lines of Doing Business in China" (2005). He also wrote the 2010 report "China’s Drive for ‘Indigenous Innovation’ – A Web of Industrial Policies." From 1987 to 1990 McGregor served as The Wall Street Journal’s bureau chief in Taiwan, and from 1990 to 1994 as the paper’s bureau chief in Mainland China. From 1994 to 2000, he was chief executive of Dow Jones & Company in China. After leaving Dow Jones, he was China managing partner for GIV Venture Partners, a $140 million venture capital fund specializing in the Chinese Internet and technology outsourcing. In 1996, McGregor was elected as chairman of the American Chamber of Commerce in China. He also served for a decade as a governor of that organization. He is a member of the Atlantic Council, Council on Foreign Relations, National Committee on US-China Relations and International Council of the Asia Society. He serves on a variety of China-related advisory boards.

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