China - A Dynamic Insurance Market for Foreign Insurer. Patrick Zeng (AGCS China Head) Sep

Transcription

1 China - A Dynamic Insurance Market for Foreign Insurer Patrick Zeng (AGCS China Head) Sep

2 Agenda 1 Market Overview 2 Allianz China / AGCS China 3 Restriction for Foreign Insurers 4 Local Policy Arrangement 5 What We Offer in China 6 Tianjin Port Explosion 7 Q & A

3 Market Overview Key Industry Facts Gross Premiums in bn EUR Non-life A&H Non-life Direct Life ,4 35,4 91,9 Market Size ,6 2,0 2,5 48,0 56,9 65,7 119,3 107,2 109, In 2013 China was the world's 5th largest life market, 3rd largest non-life market and the 6th largest insurance market overall. China non-life insurance premiums grew by 12 % in 2013 and 15.5% in ,9 73,6 135, Pricing Trend 2014 Motor 0-10% Employee Benefits (Life) ±5% Environmental ±5% Financial Institutions ±5% Medical Malpractice ±5% Property (Cat-Exposed) ±5% Employee Benefits (Accident & Health) 0-10% General Liability 0-10% Professional Liability 0-10% Property (Non-Cat-Exposed) 0-10% Workers' Compensation 0-10% Marine Cargo 5-10% D&O 10-20% Product Portfolio Major Participants Cargo & Hull: 2% Liability: 3% Accident & Health: 3% Credit & Guarantee: 3% Agriculture: 5% Property: 6% China Pacific: 12.6% Foreign Insurers: 2.1% PICC: 34% Motor: 78% Property takes 25% of non-motor portfolio, Liability 12%. (2013) Ping An: 17.9% The foreign insurers' market share is static around 2%. (2014) Other Domestic Insurers: 33.4% Source: Axco Insurance Market Report China, 2014,

4 Market Overview Supervision & Control China Insurance Regulatory Commission (CIRC) is the insurance supervisory authority, which reports to and carries out administrative functions delegated by the State Council, therefore is not an independent regulator, financed by levies on insurers' net retained premiums. CIRC is not an independent regulator. New strategic objective of CIRC is the preference for quality over quantity. Foreign Insurers Foreign companies may establish branches or wholly owned subsidiaries or may acquire a maximum 25% shareholding in domestic insurers. Although the last remaining licence restrictions on foreign insurers were formally phased out at the end of 2004, their geographical expansion is still hampered by bureaucratic delays. Fronting The abolition of the priority cession on 1 October 2009 means that 100% fronting is now technically legal. In reality, however, both the CIRC and domestic fronting partners want to see as much premium as possible retained in China. Although fronting partners will sometimes accept a minimum retention of 1% to 5%, they try to use their full capacity on foreign-invested risks and normally retain a minimum of 20% to 25%. Non-Admitted Policy Non-admitted insurance is not allowed except for international cargo. Geographic Restrictions Companies are authorisedon a branch-by-branch basis, and branches are generally not allowed to cover risks outside their designated business areas. Branch offices may only insure risks outside their designated business areas in the following cases:1). large-scale risks*, 2) inland cargo, 3) coinsured risks, 4) master policies covering all properties and liabilities of a single enterprise. Latest Regulatory Changes Environmental liability insurance has been made compulsory for specified highly polluting industries. a new risk-based capital system might be adopted in 2016 as a target date. From 1 August 2013, foreign insurance companies may denominate their capital in either CNY or freely convertible foreign currencies of equivalent value. New consumer protection regulations will require car dealers to offer threeyear warranties on all new cars with effect from 1 September Source: Axco Insurance Market Report China, 2014

5 Market Overview Market Distribution Channels Distribution Channels Agencies/ Agents Global Brokers: 2% Local Brokers: 4% Agents: 8% Other (Direct/ Bancassurance): 86% Intermediary channel realized non-life premium of EUR 6.8 bn by Q3 2012, which accounts for around 14.0% of total non-life business, increased from 8.8% in 2010 and 10.6% in There were 501,000 individual non-life agents at the end of 2013 There is also a corporate insurance agency sector which numbered 2,121 companies at the end of Non-life agents are allowed to represent a maximum of 3 companies Brokers The broking sector has shown rapid growth over the last few years, but is now being urged to consolidate by the CIRC in an effort to raise professional standards. The number of broking licencesrose to 416 at the end of 2012 but has been effectively frozen since June Brokers are increasing their premium volume at a rate of over 20% a year. Brokers handled non-life premiums of CNY 30.74bn (USD 4.76bn) in 2013, giving them an overall market share of 6.4%. Brokers were mainly active in commercial property and engineering, where they handled 32.3% and 63.6% of premiums respectively. Global brokers side: Aon has opened 6 branches, JLT 3 branches, Marsh 7 branches, Willis 22 branches; local brokers side: Jiangtaihas 44 branches, Huatai 24 branches. Direct Most large commercial accounts are handled on a direct basis by insurers' production departments. Major state-owned companies utilize their in-house brokers, therefore for foreign insurers, local cedant is only channel to access this business sector. Bancassurance Some banks offer mortgage and insurance packages to homebuyers, but bancassurance is far less significant for the non-life than the life market. Source: Axco Insurance Market Report China, 2014

6 Market Overview Ranking for Foreign Insurers Ranking 2014 FY GPW EUR Ranking M GPW EUR 1 AxaTianping 945,251,386 1 Axa Tianping 568,240,429 2 Grouppama 209,043,714 2 Grouppama 126,609,643 3 AIG 167,563,886 3 AIG 119,851,186 4 Starr 152,067,629 4 Allianz 73,381,300 5 Allianz 128,020,500 5 Sumsung 68,952,886 6 Liberty 116,877,686 6 Fubon 67,150,214 7 Sumsung 115,311,843 7 Liberty 65,736,214 8 Fubon 94,357,657 8 Sumitomo 54,667,486 9 Cathy 78,211,100 9 Cathy 51,455, Sumitomo 71,719, Tokiomarne 45,526, Tokiomarine 70,855, Zurich 42,845, Zurich 64,524, Sompo 32,131, Sompo 48,902, Generali 31,429, Generali 36,519, Starr 22,502, RSA 25,104, SwissRe 14,593,700

7 Market Overview Foreign Insurers taking up 2,22% of total market share 2014 Ann. GWP Others 33% Starr 6% AIG 7% Allianz 5% Groupama 9% AXA Tianping 40% Source: Chinese Insurance Regulation Commitee

8 Allianz China AGCS China Division Our Footprint AGCS China division was established in China in 2013 Allianz s first presence in China Allianz established representative offices in Beijing, Shanghai and Guangzhou AGCS, India Division with Allianz Bajaj AGCS, China Division with AZCN AZCN Guangzhou Branch AGCS, Hong Kong Branch AGCS, Japan Branch Allianz Insurance Company Guangzhou Branch (AZCN) AGCS China Division established within AZCN, focusing on Corporate & Specialty risks AGCS, Singapore Branch

9 Restrictions for Foreign Insurers License 1. Long process to gain a license 2. Geographical restrictions on license unless defined as Large Commercial Risk 3. Capital requirement Products 1. Filing products before used 2. Strict review for Specialty Risk Insurance. 3. Weak copy right protection for new products RI Transaction 1. Regulator approval needed for related transaction 2. Maximum 80% share ceded to signal insurer. Compliance requirement Talents 1. Different treatment in entertainment and gift policy. 1. Language barrier 2. Very different underwriting philosophy

10 Local Policy Arrangement Allianz China Currently has licenses for Shanghai city and Guangdong Province Insurer can not write business outside its licensed territory except for Large Commercial Business or Master Policy. Large Commercial Risk Annual Premium for insurance more than RMB 400K (EUR 57K) Equity more than RMB 150M (EUR 21M) Master Policy If the headquarter is located in Licensed territory, other locations of subsidiaries can be covered under the master policy for the headquarter. For businesses not meeting Large Commercial Business, we used PICC, Pingan and CPIC for fronting. Guangdong Shanghai

11 What We Offer in China We offered full range of product lines and local service for our global clients to support their global expansion and China localization. Services Products 1. Issuing policies for clients within licensed territory and clients meeting Large Commercial Risk. 2. Arranging local insurer for fronting. 3. Local claim service. 4. Local ARC service. 5. Premium settlement and chasing receivable. 6. Local technical support. Product Liability / CGL / Recall / Public Liability / CEAR Marine / Property All Risk / D&O / PI / Cyber / IPO / Crisis Management / Film Insurance

12 What We Offer in China AGCS China Organizational Chart Patrick Zeng Head of Corporate & Specialty Global Clients Unit Ling Chen Property & Engineering Zhengming Chen Winston Zhou Qian Li Liability Sunny Sun Zoe Zhang Financial Lines Tracy Li Nancy Lu Claims Joyce Li Jason Dai ARC Ryan Du Boris Gao Cherry Zhang Wilson Liu Property/ Engineering Vivienne Luo Liability/ Fin. Lines Danielle Han Marine Aden Ke SOE Hub for HK & SGP Annie Gan GCU Support in Shanghai Ann Wang MidCorp Hub for SG & HK Binbin Lin Connie Huang Part Time Fiona Tan Stella Huang Kathrine Ou Elyse Song Audrey Tan Felicity Long Crystal Liao Alice Guo Debbie Chen Sherry Tang Colin Yang Bella He Maggie Tang Note: staff highlighted in yellow are located in Shanghai

13 Tianjin Port Blast 165 people dead, 8 missing (official number) The largest insured man-made loss in Asia. 165 death / 8 missing (official number) The largest insured man-made losses in Asia

14 Tianjin Port Blast Affected Exporters and Importers by Countries 165 people dead, 8 missing (official number) The largest insured man-made loss in Asia. Source: Gay Carpenter Report

15 Tianjin Port Blast Impacts on Car Makers 165 death people / 8 dead, missing 8 missing (official (official number) number) The largest The largest insured insured man-made man-made losses loss in Asia in Asia. Source: Gay Carpenter Report

16 Tianjin Port Blast Estimate Insurable Loss 165 people dead, 8 missing (official number) The largest insured man-made loss in Asia. Source: Gay Carpenter Report The impact to local insurance market is still unknown.

17 Thank You Patrick Zeng AGCS China Sep 2015