A road sign of AON COFCO, a joint insurance venture between Chicago-based AON and Chinese conglomerate COFCO Group, in Pudong, Shanghai. Joint venture insurance companies have been active in large cities in China. [Photo / China Daily]

Immense potential for foreign players to grow their market share in China

Li Ping, a 24-year-old insurance graduate, eventually joined a domestic life insurance company, turning down appealing offers from two joint ventures.

"It seems that domestic insurers now have better prospects than their foreign counterparts," Li explained.

Before China's admission to the World Trade Organization (WTO), many people voiced concern that foreign insurers might flood the market and take up a large share. A decade later, the reality shows the worries were ungrounded.

By the end of last year, there were 52 foreign insurers operating in China, but their market share remained less than 5 percent, which gives Chinese insurers an absolute edge in competition, said Xu Jinliang, a professor of insurance at Shanghai University of Finance and Economics.

To be more specific, the market shares of foreign and domestic insurers were 4.4 percent and 95.6 percent, said Chen Wenhui, assistant chairman of the China Insurance Regulatory Commission (CIRC), the country's insurance regulator.

Chen attributed the low market share of foreign insurers to an imbalance in the industry's development.

"In some areas, especially big cities and regions that opened to foreign investors earlier than other areas, foreign insurers have performed well," Chen said at a forum in May.

In major cities like Shanghai, Beijing and Shenzhen, foreign insurers have taken up shares of 17.9 percent, 16.3 percent and 7.9 percent. In Guangdong province, which enjoyed preferential policies early on as China adopted the opening-up policy, foreign insurers make up 8.2 percent of the market.

By the end of 2010, premium income of foreign insurers totaled 63.4 billion yuan ($9.58 billion, according to the exchange rate then), 19 times that of 3.3 billion yuan (then $399 million) in 2001.

Last year their total assets were worth 262.1 billion yuan, 29 times what they were a decade ago, just before China's entry into the WTO.