With growth in mature insurance markets being slowed by economic difficulties, insurers are increasingly looking to the emerging markets – in particular China and Latin America – to develop their business, according to more than 200 attendees at a Clyde & Co’s ‘Going Global 2010’ conference.
Michael Payton, Senior Partner at Clyde & Co, said: “This was our inaugural conference to the global insurance industry and the overwhelming response was that the emerging markets are high on everyone’s agenda.
“Our survey confirms that businesses are keen to capitalise on the huge growth opportunities available. Given the size of the potential market it is probably not surprising that China was the top territory in which our attendees were interested, with 29% of respondents looking to develop there. It is the sixth largest insurance market in the world, with $133.5 billion in premium for the first half of 2010.
“Both life and non-life insurance sectors have grown strongly, reflecting an increasingly wealthy Chinese population and rising awareness of the benefits of insurance. Continued building and construction projects, regulatory change making various types of insurance compulsory, significant health care reform and rapid urbanisation are amongst the factors underpinning growth potential in the Chinese insurance and reinsurance markets.
“The key concern for those looking to China was the claims environment and the introduction in October last year of the Chinese Insurance Law sets very challenging targets for claims handling and settlement.”
Other findings from the survey include:
Latin America was almost as popular with 25% of respondents looking to develop there, with the Middle East and India polling 13 and 12% respectively.
Since the opening up of the Brazilian market two years ago, 70 reinsurers and 8 Lloyd’s syndicates have entered the market. However, recent changes to the reserve requirements for local reinsurers have removed some advantages which is probably why a quarter of respondents were concerned about competition issues.
For Latin America the business lines that respondents were most interested in included marine (33%) and property (25%). The former is in response to the booming oil & gas industry (Petrobras is investing a $22.4 billion over the next four years) which has attracted a lot of interest from international business. The property insurance market is being driven by the huge investments in infrastructure and construction ahead of the 2014 World Cup and 2016 Olympic Games.
While the Middle East has undoubtedly been affected by the credit crunch, there are still strong signs of development particularly in health and life sectors. In India the slow progress of the draft Insurance Law 2008 has made increasing foreign investment impossible and 41% of those interested in India said that their primary concern was the regulatory environment.
Overall, respondents are looking to move quickly with around half saying they will be taking steps in the next six months and the rest talking about the 6-12 months.