China presents a major opportunity for global insurers as the rapidly growing economy opens up amid low insurance penetration rates, Manulife’s president and CEO said on Monday.
The world’s second-largest economy is at “a very nascent stage of its development as it relates to the industry that we operate in: insurance,wealth asset management and retirement,” Roy Gori told CNBC from the China Development Forum in Beijing.
The Canadian insurer operates in 17 markets globally.
Gori said China’s current insurance penetration rates were “very, very low” by global standards.
Insurance ownership in the U.S. runs at 7 percent of GDP and is at 10 percent in the U.K. and Japan, according to Reuters.
It’s about 5 percent in China, according to Gori.
“China is a tremendous opportunity for us,” he told CNBC.
As China is aging, pension and retirement needs are also significant, Gori added.
Foreign insurers have been in China for decades, but their collective market share is still below 10 percent as a result of regulatory restrictions and limited awareness about insurance as coverage rather than as investment.
Current rules limit foreign holdings in Chinese insurance joint ventures to 50 percent. AIA is the only wholly owned foreign insurance firm in China as its operations were set up before the restrictions were introduced.
Beijing said last year it planned to lift the ownership cap to 51 percent for foreign insurance joint ventures in 2020 and remove the limit completely two years later, which would allow for further expansion.