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The Chinese non-life insurance market is one of the most important growth markets globally. It offers unprecedented opportunities and growth potential to domestic and foreign insurance companies. However, the opportunity coming from this business sector needs to be weighed against fierce local competition, strong regulatory requirements and significant differences in market dynamics between the provinces and cities in a fast changing economic environment.
Given this, global insurers are questioning how to best enter the market, with some raising concern that the opportunities for profitable growth are limited in the short-term. However over the long-term continued macroeconomics progress such as GDP and industry growth and changes in social factors, such as the continued rise of the Chinese middle class and their need to secure their growing wealth, will drive new developments and opportunities in the market.
In addition to cultural and language barriers, one of the key reasons for the currently limited footprint of foreign insurers in China is the need to manage the stringent local regulatory requirements. The China Insurance Regulatory Committee (CIRC) dominates with their central office in Beijing and the local bureaus in the provinces who dictate specific local reporting requirements.
A consequence of the strictly enforced regulations is the need for a special localized approach for IT, both for applications and the infrastructure that have to be handled by an experienced local team with careful planning and a thorough evaluation of the local alternatives.
The Chinese insurance market is “too big to miss”. Although it is not easy to enter or to compete in it, it is really important for foreign insurers to realize that the current, transitional period offers significant opportunities to gather experience and seize market share. Starting immediately is key as it will take three to five years to complete the licensing process, which includes as a first phase opening a Representative Office for a minimum of two years.
BearingPoint and its local partners offer advice and support to help you enter this important market and master the challenges.