According to PICC Property & Casualty, the decision made by China to permit foreign insurance companies to sell mandatory auto insurance might help the local insurers to make base rate government changes for those policies.
The board secretary in Beijing for this largest non-life insurance in the country, Zhang Xiaoli, said that the result of bringing in compulsory vehicle coverage with third-party liability will be “quite limited” for the countries based in the country. He explained that insurance companies from other countries probably won’t “launch any big offensive” because they are continuing their struggle from the debt crisis in Europe.
According to BoCom International Holdings Co., it’s likely that regulators will be easing their control over the rates being charged by insurers coming in from overseas, for the required policies. They went on to say that by increasing the base rate with the government, it might give some help to local insurance companies that have previously been posting losses for the compulsory policies.
An analyst from that company, Li Wenbing, said that this is positive news, adding that “Just breaking even in the mandatory business will be a huge boost to profitability.”
When the compulsory insurance was opened, it eliminated a restriction that had been walling out foreign insurers from being able to get into the largest auto marketplace in the world. Drivers have a tendency to select the same insurance company for both their mandatory policy and any optional coverage they purchase.
International insurance news updates.