China Commercial Insurance Market Shows Soft Pricing Amid Selective Underwriting

The commercial insurance market in China is currently characterized by generally moderate to soft pricing conditions, favoring preferred and well-performing risk accounts. This environment reflects a broader market trend of abundant capacity across most business lines, offering buyers negotiation leverage during policy renewals. However, an exception to this buyer-friendly trend is observed in the Directors and Officers (D&O) liability sector, which continues to experience upward pressure in premiums. Underwriting practices in the Chinese commercial insurance sector continue to be disciplined and selective, with insurers maintaining a strong focus on achieving profitability. This selective approach extends to casualty and liability lines, where intensified competition has led to somewhat increased flexibility in coverage terms. Most policy renewals involve maintaining existing limits and deductibles, though clients benefiting from premium savings are leveraging the soft market to increase coverage limits or reduce deductibles when risk performance justifies such adjustments. Chinese insurers are also pursuing broader coverage improvements, including the removal of restrictive policy conditions, especially for clients demonstrating good risk management practices. Despite a market largely favorable to buyers, capacity constraints remain notable in the automobile insurance sector, presenting a primary limitation to market availability. Beyond underwriting and pricing, Chinese insurers are increasingly investing in technological innovation. Specifically, they are advocating for scenario-based digital solutions designed to create more customized insurance products tailored to various industries. This strategic pivot aims to enhance the relevance and responsiveness of insurance offerings to evolving sector-specific risks. Additionally, the insurance industry in China is fostering collaborative frameworks by building open and shared ecosystems. These involve partnerships with upstream and downstream industries, technology firms, and service providers, signaling a move towards integrated risk management approaches that transcend traditional insurance coverage. Overall, while the Chinese commercial insurance market remains buyer-friendly with abundant capacity and soft pricing, select segments like D&O face upward pricing pressures. Innovations in digital technology and ecosystem collaboration reflect ongoing efforts among insurers to adapt to market demands and improve profitability.