* AIA and Prudential among those posting strong
* Regulatory crackdown on risky investments hits local firms
* Foreign insurers to hire up to 40 percent more salesagents
* Foreign insurers expand into smaller cities as demandgrows
By Sumeet Chatterjee
Local insurers rushed to offer him products with attractivefinancial returns. In the end, he decided on a simpler, "morereliable" product sold by the unit of a
Customers like Zhang are helping foreign insurers quicklygain market share in
The growth of
"We have the differentiated strategy by focussing on sellingprotection products ... and we reaped the benefit of that," hesaid, referring to a 60 percent jump last year in the
Foreign insurers, including AIA Group, Avivaand Prudential have been in
Current rules limit foreign holdings in Chinese insurancejoint ventures to 50 percent. AIA is the only wholly ownedforeign insurance firm in
Both Prudential and Aviva saw new business profit in
Many foreign insurance companies are strengthening theirpresence in smaller cities, where insurance penetration -measured in terms of the value of premiums underwritten as apercentage of gross domestic product - is lower than the 3percent of GDP figure for the country as a whole.
Insurance ownership in
That has led to a hiring binge: leading foreign insurers arelooking to bring on up to 40 percent more front-line salesagents in
AIA, for example, had close to 35,000 agents at the end oflast year compared with 15,000 in 2014, and Cai expects asimilar hiring growth rate as the company expands into second-and third-tier cities.
The sector regulator in
LOCAL COMPETITION
Top Chinese firms such as China Life Insuranceand Ping An Insurance Group remain dominant playerson their home turf, collectively holding about 90 percent of thelife insurance market.
But their industry is in the midst of a massiveregulator-driven clean-up of the life insurance sector, theworld's No. 3 market, to limit risk to the financial system.
Last month,
As a result of those measures, Chinese insurance firms sawtheir net operating cash flow slump 65 percent in 2017, Reutersreported in January, citing data in a government memo. Assetsheld in universal life insurance funds dropped 50 percent.
Rating agency Fitch expects premium growth to remain low in2018 as Chinese life insurers shift from short-term investmentproducts to more complicated products with protection featuresfavoured by the regulator.
"We have traditionally focused on that business, certainlyin the last three or four years, on health and protectionproducts versus competing for savings or bank-type products,"said Prudential Group's chief executive Mike Wells.
Enthused by a surge in demand, growing awareness and risingwealth in smaller Chinese cities such as Foshan, Taizhou and
"From the growth rate you can tell the opportunity is there,the market is even less penetrated. However, the wealth effectand the average income is rising," AIA's Cai said, referring tothe smaller Chinese cities. "So we do see similar success willbe coming there."
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