China life insurers to focus more on quality over premium growth: analyst

Tightened regulations weakened China life insurers’ premiums in December.

Chinese life insurers are expected to focus more on quality growth over top-line premium growth in order to spread risks effectively, UOB Kay Hian said in a report.

The sector managed to sustain a positive yearly premium growth in 2023, with a total insurance premium income of RMB2.69t during the year– a 5.2% growth compared to 2022, says UOB Kay Hian analyst Kenny Lim Yong Hui.

However, December premiums are “weak”, with the top five life insurers only recording a monthly premium increase of 4% during the month. This is 10% lower than 2021 levels, Lim noted.

Lim attributed this to tightened regulations as life insurers are now prohibited from collecting most of the premiums in advance. 

“Weak December premium data suggests that insurers kick off “jumpstart sales” without much fanfare under the new regulations,” Lim said. 

“We believe that life insurers will focus more on quality growth over top-line premium growth in order to manage spread risks effectively amid the low interest rate environment,” he added. 

For P&C insurance, premium growth slowed further on muted non-auto insurance business.