The insurance business on China's mainland may grow slowly as life insurers face investment risk and keen competition while seeing lower operating margin in the non-life sector, Fitch Ratings said yesterday.

 

The rating agency expects tighter capital to hold back the life insurers in pursuing high growth, while lower dividends for policyholders have also made insurance products less attractive.

 

Market competition will remain intense given the homogenous savings-type product features, while investment liberalization by the China Insurance Regulatory Commission may expose Chinese insurers to new risks which they are not well prepared to manage, Fitch said in a report.

 

The CIRC said premium growth in the life sector slowed to 2.4 percent annually in the first half of the year, from 6.8 percent in 2011 and 28.9 percent in 2010.

 

Fitch cautioned that rising claims and tightly regulated pricing will cause consistent losses in the compulsory auto insurance business.  

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