China property and casualty insurance sector headed for moderation

Premium growth is projected to slow to high-single digit levels.

Rating agency Moody's is expecting a modest premium growth for the property and casualty (P&C) insurance sector in the coming 12-18 months on the back of slowing GDP growth and increasing price competition under the new non-mandatory motor pricing regime.

Total P&C premium growth, it said, will moderate to high-single digit levels.

"Our baseline scenario assumes real economic growth of 6.6% and 6.3% in 2016 and 2017, down from 6.9% in 2015," said Moody's.

Moody's added that while vehicle sales have rebounded in 1H 2016, motor premiums -- which account for three-quarters of total premiums -- will log lower growth due to the nationwide implementation of commercial motor pricing liberalization in July 2016.

Non-motor premiums, it said, will become an increasingly important contributor to total premiums.

Government initiatives, including “One Belt One Road” and the “National Ten Rules” will open up growth opportunities for property, liability and agriculture insurance
lines.

In addition, we expect the introduction of the nationwide household earthquake insurance program in May 2016 will raise risk awareness and demand for protection against catastrophe losses, especially among farming households.

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