Foreign Insurers Stuck in the Bleacher Seats
December 13, 2010 Leave a comment
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