The number of brokers setting up in China indicates great potential in the market
A recently published Lloyd’s report highlighted a greater need for brokers in the Chinese non-life insurance market.
However, Aon, HSBC, JLT, Cooper Gay, Willis and Guy Carpenter (a subsidiary of Marsh) are already present, having entered China in joint ventures since they were first licensed in 2002. Marsh was given the first wholly owned subsidiary licence in 2007.
The penetration by both Willis and Marsh in such a short time is impressive. Out of the top ten brokers, each has a market share of just over 5% and an income of around $70 million. By way of comparison, the top broker, Chang’an, has a market share of about 10.5% and income around $150 million.
International brokers now account for 28% of the top ten brokers, and with Benfield setting up an office in Shanghai and Lockton in Beijing, this figure is set to rise.
However, brokers – both local and foreign – do not figure particularly highly in the grand scheme of things, controlling less than 2% of the total market. This is partly why there is space for new brokers to move in: broker expertise, especially in increasing risk awareness in the country, will allow expansion of both the broker market and insurance market as a whole.
The growth of the Chinese non-life market is exponential, with Lloyd’s estimating that the market could be worth over $35 billion by the end of 2007. Premium growth has exceeded GDP growth for the past five years.
But the fact that so many brokers are heading to China probably serves as the best indicator of the insurance market’s potential.
