Global Expansion

India vs. China

India is poised to win the battle to increase market share for insurance companies.
By: | August 25, 2014 • 5 min read

The governments of India and China are vying with one another to attract more foreign capital for their respective insurance industries.

Many observers say that India is best positioned to win that battle.

In a major development, India’s Finance Minister Arun Jaitley recently proposed that foreign companies be allowed to own up to 49 percent of insurance companies in the country. The investment cap currently is 26 percent.

This change could attract billions of dollars for the insurance sector in India, industry officials said.

The insurance sector in India is worth $41 billion and lately has achieved a yearly growth rate of between 32 percent and 34 percent.

The legislation still has to pass, but the change in ownership law is seen by many industry experts as likely to be enacted.


“The industry has been waiting for this for a very long time,” Roopam Asthana, chief executive officer of Liberty Videocon General Insurance, told the Asian Business News.

India opened its insurance sector to private and foreign ownership in 2000, and most of the top international insurers have since entered the market.

The country also has implemented new accounting standards to bring India in line with the standards of the International Financial Reporting Standards.

“This would result in improved quality of financial reporting, which is critical for attracting foreign capital into the country,” Ashish Gupta, partner, Walker Chandick Co. LLP, said in an emailed statement.

Raising Premium Income

In China, meanwhile, the government has announced measures to develop its insurance industry, vowing to raise premium income to 5 percent of GDP by 2020.

The Chinese government has announced measures that will let insurers become “an important pillar of the social security system” instead of their previous role of playing “a supplementary function.”

The measures will let the insurance industry become “an important pillar of the social security system,” according to the State Council of the People’s Republic of China’s “Several Opinions on Accelerating the Development of the Modern Insurance Service Industry,” issued in July.

The state council said that commercial insurance providers will become the primary undertakers of individual and household programs and an important supplier of corporate pensions and health insurance.

Susan Munro and Amy (Yiting) Wang of New York-based Steptoe & Johnson LLP, said that “this is a significant change from the requirement that commercial insurance ‘play a supplementary function’ to the development of the social security system … and signals increased government expectations of insurers’ participation in tackling critical social issues.”

Additionally, insurance companies are being encouraged to support the development of urbanization, major infrastructure construction, and the long-term stable development of the stock and bond markets in China, the pair noted.

“The 2014 ‘Opinions’ also call for improved underwriting of risks for technology companies and research institutes, the vigorous development of credit insurance for small and micro enterprises, loan guarantee insurance for individual consumers and the development of export credit insurance and overseas investment insurance,” they said.

Consistent Growth

In India, the Confederation of Indian Industry stated that the insurance sector of the country has been witnessing a consistent growth rate and its present worth is $41 billion.


The industry of late has achieved a yearly growth rate of between 32 percent and 34 percent, and this makes it the fifth best among emerging economies around the world, according to the CII.

A survey by CII found that 60 percent of non-life insurance companies in India would record an average growth rate of more than 10 percent.

The various entities of the industry are also bringing out newer products on a regular basis to attract customers, the CII added.

One of the major reasons the insurance market in India is attractive is the growing level of awareness about insurance. People nowadays value their lives, their health and their families even more than before, said the CII.

Another reason for the growing popularity of insurance policies in India is the benefit of tax exemption that is provided to family-oriented and individual plans, observed the CII.

Growth in the Indian insurance market is being fueled by the growing population base, rising purchasing power, increasing insurance awareness, increasing domestic savings and rising financial literacy.

The Deloitte consulting firm said that, on the demand side, growth in the Indian insurance market is being fueled by the growing population base, rising purchasing power, increasing insurance awareness, increasing domestic savings and rising financial literacy.

Added Lloyd’s market intelligence team: “Remarkable economic growth is driving the development of new classes of business in the non-life insurance market in India and increasing demand for specialty insurance and reinsurance products.”

“From the period 2009 to 2012, Lloyd’s gross written premium in India grew from $164 million to $245 million,” the insurer said. “The opportunities which exist in India’s insurance market cannot be ignored.”

Chinese Market Participation

With the Chinese government encouraging increased foreign participation in its insurance market, several major international players are exploring the market.

Most recently, the Starr Cos., led by Maurice “Hank” Greenberg, former chief executive of American International Group Inc., has taken a 93 percent stake in Shanghai-based Dazhong Insurance Co. Ltd. of China.

The deal was described by Dazhong as the first foreign takeover of a state-backed Chinese general insurer. The Chinese insurer will be known as Starr Property & Casualty Insurance (China) Co. Ltd. or Starr China.

In a statement, New York-based Starr Cos. said it will expand the Chinese insurer’s product portfolio beyond its existing auto insurance programs “with an array of commercial property and casualty products. Chinese corporations and businesses will be able to access secure coverage for various exposures such as accident and health insurance, political risk, financial and management liability.”

Warren Buffett is also exploring the Asian market.

Buffett’s Omaha, Neb.-based Berkshire Hathaway has hired Marc Breuil, who previously headed AIG’s operations in Hong Kong and Taiwan, and Marcus Portbury, who was the head of casualty for the Asia-Pacific region, according to Dow Jones, citing persons with knowledge of the hires.

The hires “are part of the investment firm’s effort to build a commercial coverage business in Asia,” Dow Jones added.

Right now, though, the insurance battle between India and China is being won by India, most observers noted.

India’s diverse free-market private sector and relatively free legal and political system give the nation enormous advantages over China, said economist A. Gary Shilling, president of Springfield, N.J.-based A. Gary Shilling & Co., Inc., economic consultants and publishers of the monthly newsletter “Insight.”


“India has the basis for a strong economic future,” Shilling said. “They’ve got a democratic government, they’ve got the rule of law and they’ve got corporations that are private businesses; they’re not huge state companies like in China.”

Shilling added that China is a top-down economy and that private companies, by and large, are very small and unable to compete internationally, whereas in India they are.

Shilling also noted that India is the world’s largest democracy in terms of numbers. “And they speak English, which in today’s world that’s where the action is,” he said.

“In the long run,” he said, “and it may be many years, but I’d bet on India over China.”

Steve Yahn was a freelance writer based in New York. He had more than 40 years of financial reporting and editing experience. Comments can be directed to risk[email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.


That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.


Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]