What Makes China the Fastest Growing Market for Insurance Companies
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China, India and Southeast Asia record the fastest growth for insurance companies in the Asia-Pacific market, says CBRE Asia-Pacific report launched this month. It says that in past two years, insurance firms have been active in leasing office spaces for business expansion, and have also engaged in relocation for cost saving. The total leasing volume by insurance companies increased by 36 percent of y-o-y growth in 2018, with the bulk of leasing transactions completed in H1 2018.
The increasing per capita income from expanding middle class has heightened the demand for both traditional and universal life insurance, as per the report. This is also contributing to economic growth in Asia.
In terms of leasing purpose, Beijing marks the highest proportion of leasing expansions. Most of the insurance companies want to relocate themselves in central business district CBD and at Financial Street. And the real estate industry is also keeping a tab on the emerging trends and demand from the business community to make the most of opportunities.
According to report, the reason why Chinese market is taking off in the insurance industry, it’s because of digital innovation and the entry of new players in the insure tech segment. With nearly 725 million mobile internet users, a measured regulatory approach that supports innovation and the continuous development of new, disruptive services by digital giants Alibaba, Baidu, and Tencent, insure tech has become a new fad in China for investors and entrepreneurs both.
Other SEA Countries
While China, India and Singapore are picking up the growth in insurance premiums, countries like Indonesia and Philippines record the relatively lower growth. As the risk of natural disasters becomes a major deterrent in the growth of the sector, such as earthquakes in Indonesia and typhoons and flooding in the Philippines, insurance industry seems to be troubled in these regions of Asia.
What are the other factors that deter the growth? There are key real estate-related challenges for insurance companies in Asia-Pacific, which range from new lease accounting standards to purchasing office properties in emerging Southeast Asia. Opportunities include the growth of flexible space and brighter prospects in China as the insurance sector opens up to foreign investment.
Among other challenges in the sector, company owners face a major challenge which is to establish offices in Southeast Asian markets without property ownership restrictions.
However, report claims that despite steady growth in online insurance platforms, the agency model remains the main conduit for life insurance sales. Insurance companies must therefore build and maintain highly efficient real estate portfolios capable of supporting continued expansion.