The Insurance Association of China’s chairman has announced that the country will likely be opening its doors to the largest auto market in the world to make it possible for foreign companies to enter into the mandatory auto insurance marketplace in 2012.
Currently, this auto insurance market of $31.5 billion is entirely led by insurance companies from China, for example, Ping An Insurance and PICC Property and Casualty Co., but regulators are working to bring in a greater amount of competition.
Jin Jianqiang, in Taipei, explained that insurers from other countries are only currently permitted to sell commercial auto insurance, adding that China is now hoping to make it possible for foreign companies to take part in both the commercial and the mandatory forms of automobile insurance.
According to Jin Jianqiang, next year offers a strong opportunity for inviting foreign insurance companies into the mandatory auto insurance market of China, including Taiwan, in 2012.
By gaining access to the mandatory automobile insurance market, the insurers from other countries may be able to provide better competition among the Chinese rivals in selling both mandatory and commercial car insurance policies as vehicle owners seek a single location in which to purchase both types of coverage.
Some analysts are opposed to the change, saying that it won’t have a significant impact on the sector within the upcoming term, since the insurance companies that are based in China already have such a large advantage when it comes to both sales networks and capabilities after sales.
Industrial Securities Co. analyst, Zeng Sufen, said that if China should indeed open up the mandatory insurance marketplace, it likely won’t have a large short-term impact.
