A new Best’s Market Segment Report, titled, “Market Segment Outlook: China Non-Life Insurance,” states that pressure on premium growth and underwriting performance due to comprehensive reform of motor insurance; execution risks and negative profitability impact arising from expansion of non-motor lines; and potential rise in impairment losses from fixed income investments are key supporting factors for the negative outlook.
China’s non-life insurance market registered a year-over-year increase of 7.2% in direct premium written (DPW) in the first 10 months of 2020, following a solid 10.7% expansion in DPW in 2019. Notably, this growth was steered by non-motor lines of business, particularly health, which grew by 35.8%, agriculture (21.8%), engineering (19.2%) and liability (18.1%). The market’s largest business segment, motor, continued to grow, albeit at a slower rate and now makes up slightly less than 60% as of October 2020, versus over 70% of industry DPW five years ago. Credit and surety, which has historically been a strong driver of growth among non-motor segments, was the only line of business to record a contraction in premiums.
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