Ratings agency Moody’s is maintaining a stable outlook for the Chinese property and casualty insurance industry.

Premium growth is expected to be about 10-15% this year, down from 18.5% the year before.

“Weak external demand” from the eurozone and corresponding tightening measures have contributed to this decrease, Moody’s says.

The China Association of Automobile Manufacturers expects new car sales to increase by about 8% to about 20 million this year.

This will contribute to a steady growth in the motor insurance industry, which accounts for three-quarters of property and casualty premiums in China.

Moody’s says other developed markets have a “more diversified business mix”, with property and liability-type insurance coverage making up about one-third of total premiums.

However, even after a decade of strong insurance growth, China is still an underinsured economy, compared to more mature markets like the US and the UK.

“The dominance of motor insurance in China indicates that a large part of the economy is still uninsured or underinsured, especially for property and liability cover,” Moody’s says.

It says China’s ongoing industrialisation and growth in household income – coupled with more awareness of insurance needs – will contribute towards a deeper insurance penetration in coming years.

It says the underwriting cycle in China peaked in 2011, resulting in a “slightly weaker” profit outlook.