US insurer Liberty Insurance Co is fully prepared for China's opening-up of the compulsory third-party liability automobile insurance market, CEO Jackson Tang said on Wednesday.
The move will allow the company to provide a full range of auto insurance products to its clients, he said.
Although auto insurance accounts for about 80 percent of its business in China, the company has had to work with local partners in selling auto insurance products.
Liberty Insurance is set to bring significant competition to the Guangdong market after the opening-up but not in the short term, because it will take time to expand its outlets, said Luo Xiangming, vice-dean of the insurance department at Guangdong University of Finance.
Posting a 70 percent increase in premiums annually in China in the past five years, the company expects the growing middle-income population in the country to become a strong force behind the growth in the coming years, said Luis Bonell, executive vice-president of Liberty International.
Despite a capital shortage in some of the small and medium-sized enterprises in China, Chinese SMEs should post robust growth with increasing support from the government, Tang said.
The penetration rate of non-life insurance in China stands at only one-third of those in developed countries, which means immense potential, Bonell said. SMEs contribute about 20 percent of Liberty Insurance's business in China.
The Chinese market accounts for less than 1 percent of the company's business, but that ratio is expected to grow in the future, he said.
The company officially opened a branch in Guangdong province on Wednesday, after its headquarters in Chongqing municipality, and branches in Beijing and Zhejiang province.
Opening a new branch in China takes one to 1 1/2 years. Each branch needs four to six years to break even, Bonell said, with the headquarters in Chongqing becoming profitable last year.
Foreign non-life insurers took up less than 3 percent of the Guangdong market last year, Luo said.
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