China may soon open its doors to foreign auto insurance companies. China is the world’s largest auto market and insurance coverage in mandatory for all drivers in the nation. The country has been closed to foreign companies for decades, but China’s prominent place in the auto market may soon change that fact, according to Jin Jianqiang, chairman of the Insurance Association of China. The change may come as soon as 2012.
China’s auto insurance market is valued at $31 billion currently. The market is dominated by Chinese insurance companies, which are relatively few in number. Insurance regulators fear that competition has become stagnant, which can often lead to excessive prices for consumers. Regulators are now looking to slacken the regulations concerning foreign insurers in the hopes of bringing more competition to the market, which will also bring more money to the country and, perhaps, more savings to consumers.
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For now, foreign insurers are only permitted to sell commercial insurance policies within the country. The government is currently considering extending their business privilege to allow them to sell mandatory insurance coverage as well. The market may be open as soon as next year, but there are no concrete plans for such action as of now. How the plan will affect the country’s auto insurance industry as a whole is unclear, but analysts doubt that there will be any negative impact.