AM Best has maintained its stable outlook on China’s non-life insurance segment, citing sustained premium growth supported by new energy vehicles (NEVs), health reforms and emerging product developments, as well as supportive regulatory policies and initiatives to foster market development.

The Best’s Market Segment Report, “Market Segment Outlook: China Non-Life Insurance,” states that concerns about China’s economic momentum have emerged due to lower GDP growth forecasts through 2030, along with a slowdown in credit and export growth and persistent weakness in the property sector. At the same time, China’s non-life insurance segment has demonstrated resilience amid persistent uncertainty, albeit experiencing a moderate slowdown in direct premiums written growth in recent years. Although the growth in non-motor lines has outpaced the motor segment as insurers have actively diversified their portfolios, the gap is narrowing as rising NEV sales has benefitted the motor segment, while economically sensitive lines like commercial property, engineering, and liability reflect the broader slowdown.

“The surge in new energy vehicles sales has driven higher demand for NEV motor insurance. However, while premiums for NEVs have been rising, industry data shows higher loss frequency and severity as compared with internal combustion engine vehicles — the former linked to driver inexperience and the latter to higher repair and replacement costs — and this contributed to overall insurance losses in 2024,” said Lucie Huang, senior financial analyst, AM Best.

Non-life insurers also have expanded coverage into emerging sectors such as green energy, the low-altitude economy (e.g., drones and related liabilities), and high-tech manufacturing. Furthermore, the country’s focus on sustainability is driving demand for liability products like safety production and environmental pollution insurance. In addition, according to the report, the adoption of digitalisation, automation and Chinese-developed AI tools has accelerated, supporting functions from client servicing, underwriting and auto-quotations to claims handling, fraud detection, and back-office operations. These technologies have boosted operational efficiency, though they also introduce associated risks.

“With subdued economic growth and an increasingly competitive landscape, smaller insurers face challenges in maintaining profitability and market share,” said James Chan, director, analytics, AM Best. “Over the long term, AM Best expects that non-life insurers with refined business-line management and a strong focus on efficiency are more likely to sustain their position in the market.”

To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=359418.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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