Foreign Insurers Retreat On China’s Policy

The proposals by U.K Standard Life scales back to create businesses raising doubts to open financial sector in foreign competition. This foreign institutions continue to pour in China making it one of the world’s largest insurance market with the foreign life insurers cutting their stakes into local venture highlighting the difficulty of operating in environment where government policies favor out domestic policies with insurance market dominated by Chinese firm.

Other than U.S insurance giant American International Group Inc, foreign life insurers have to enter China market with a partnership from Chinese partners where they are restricted to with a 50% stake.

The foreigners expect to share China’s life insurance market to grow up by 8% in 2012 which is a less optimistic figure anticipating around 10% share in 2011. In the first half, the foreign players had less than 5% share in China’s market with a downfall of 9% in 2005, making China’s top three life insurers accounting for 63%.

The dominance of Chinese players lack predictability surrounding approvals making challenges to be faced. The frequent comments one need to make government is that they need to speed up the branch opening which would help them do a local domestic players do, and supervise the same way domestic player companies work.

The Chinese partners are non-financial companies, who are frustrated with the time it takes for venture to become profitable. This partners often compliant of that with rich knowledge and experience, the venture isn’t getting any benefit.