The auto insurance wall in China may be opening up within the next year. Sources in China have reported to the media that foreign auto insurance companies from outside of China may soon be allowed to sell not only commercial auto insurance, but mandatory auto insurance as well. The market share for selling mandated auto insurance could increase for foreign insurance companies by the end of 2012. As it stands right now, domestic Chinese auto insurance companies have a monopoly grip on the sale of mandatory auto insurance, but officials inside of China want to bring in competitive companies from other countries, such as Taiwan.
If China does in fact open up this auto insurance wall from the rest of the world, it will benefit consumers in China greatly. People who own cars in China will likely enjoy many different choices of companies to go to for their auto insurance needs, which means many people will find better prices more suitable to their budgets. The combination of more money in the pockets of the Chinese consumers and more competition among auto insurance companies is predicted to be a great asset to the Chinese economy in the coming years. As other economies, most notably the US, continue to struggle, China is flourishing more now than ever. The aid of more competition in the auto insurance industry there will only benefit their overall economic outlook even more.Since commercial auto insurance companies sell many different packages of insurance that cover a number of different, varying risks, it is not required that car owners purchase from these companies. The Chinese auto insurance companies sell the mandatory insurance packages that every driver in China must have in order to legally operate their vehicle, and Chinese consumers tend to buy any extra coverage they want from these same companies. For that reason, the Chinese mandatory insurance companies reap nearly all off the massive car-owner market in China, as sometimes the bare minimum insurance that is required by Chinese law is not enough to completely cover the damages of an accident. In truth, you can never be “over-insured” if you want to be confident that your vehicle is protected in case of an accident.
Right now, the people of China have very few options for spending the least amount of money on the most comprehensive coverage. Because the Chinese government keeps a very watchful eye on the sales of insurance in China, introducing competitive foreign companies can only be a benefit to the Chinese consumers. These foreign auto insurance companies will help to break the wall between the mandatory insurance companies and the commercial insurance companies, and all drivers in China will enjoy more flexibility with their choices for auto insurance. It may take some time for the foreign competitors to get going in China, but they will make an impact soon enough.
The Chinese wall around auto insurance is about to go down. This is a very big deal in China, because the people there don’t have many options for auto insurance right now. They can only pick from a few companies, but those days will quickly come to an end once competitive companies from other parts of the world are allowed to sell in China.
