Could foreign insurers increase 0.1% market share if they are allowed to sell the whole motor package?

Insurers have often looked enviously at the motor insurance market in China, eager for a bigger piece of the action.

The potential for foreign insurers is huge. China’s new car sales overtook the USA in 2009, making it the world’s largest motor market. In addition, Chinese consumers tend to buy motor insurance through agents, meaning online sales of motor policies are low. Foreign insurers could corner the market if they import their operating models into the country.

But foreign insurers have had many hurdles to selling Chinese motor insurance – the biggest being that they were unable to sell basic third-party liability policies as part of wider commercial motor policies.

This meant that consumers tended to favour domestic insurers that could sell them the whole package. Foreign motor insurers’ overall motor market share was a paltry 0.1%.

But a recent announcement by Chinese vice-president Xi Jinping said that this barrier would be removed.

The question is whether this will be enough to encourage foreign insurers to flood in, as analysts believe that motor rates will be set by the state. An additional issue for insurers is the high level of road deaths in the country.

Still, it is a positive step for foreign insurers, who will no doubt be wishing for further reforms.


£1.9bn? We’ll end up paying four times that …  

New figures from the FSA show that the consequences of payment protection insurance (PPI) mis-selling are still spiralling. Customers received £441m in PPI payouts in December 2011, the highest monthly payment yet.

Consumers got £1.9bn in total last year, but this figure just scratches the surface of the total expected payout for the mis-selling. Which? executive director Richard Lloyd said that the £1.9bn figure was a quarter of what lenders expected to pay out. Barclays Bank alone set aside £1bn to cover the cost of mis-sold PPI.

Today, the bank published its customer complaint numbers for the second half of 2011, which show that PPI grievances rose by 67% during 1 July to 31 December last year.

The PPI scandal has been dominating headlines for a long time, but if today’s news is anything to go by, there will be plenty more to come.

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