Drivers buying cars specifically for speed are increasing costs in the industry.
Though international insurance news sources have estimated that the industry is worth about $50 billion for insurers in China, new rules are allowing foreign insurers to take their place in the country, as well, as they discover all new forms of risk that aren’t seen in other nations.
Some consumers buy cars for speed and consider them disposable, even if they’re Ferraris.
This risk is one of the major challenges faced by insurers from around the world – such as AXA, Allianz, and Chartis – as they take their first steps into the Chinese auto coverage marketplace. This largest car market in the world must now work around strikingly poor driving standards and a whole new group of drivers who are not familiar with the idea of protecting their vehicles against repairs and collisions.
Though international insurance news has been labeling Chinese auto coverage as a tremendous opportunity due to its size, there are several struggles which must also be faced and which can take some of the value out of what this marketplace has to offer. Instead of diving in head first, as had been initially expected from global insurers, it is now much more likely that they will gently take tiny steps into the country to help to protect themselves against what could possibly be tremendous losses.
Furthermore, regulations for insurers from other countries are also quite strict in China.
Foreign insurance companies are required to submit an application which requires approval before they are legally able to open up a new branch. Even if they do receive the official approval, it could take 12 to 18 months each time.
This, in combination with the higher than expected risks within the country, have forced insurers from other countries to enter the marketplace much more slowly and tentatively than had once been believed. Even if they had wanted to careen forward at full tilt, the latest international insurance news has shown that it wouldn’t be possible, as the state regulations are leaving foreign insurers with much more limited networks that are significantly smaller than their Chinese rivals such as CPIC, PICC, and Ping An, which are currently backed by the state.