Chinese property and casualty (P&C) premiums should grow 15-20% in the next 12-18 months, partly driven by greater participation from foreign insurers, Moody’s says.

The outlook for the market, which grew 16.5% last year, is stable.

P&C premium growth should reflect a rebound in motor vehicle sales and increased demand for personal lines, the ratings agency says.

More participation from foreign insurers should keep competitive pressure high.

Since the liberalisation of China’s compulsory third party motor market in 2012, almost all major foreign insurers have entered, posting premium growth of 20-30% – albeit from a low base.

“While we expect foreign players’ market share to remain low, their increasing participation and their established experience overseas will add to their impact on China’s insurance market,” Moody’s Senior Credit Officer Sally Yim said.

Government policy will continue to support household income and consumption, while urbanisation and general insurance awareness are rising.

Underwriting capacity remains abundant, and insurers will continue to rely on investment income to support earnings.

Further deregulation in non- compulsory motor premiums may create risk, but this could be offset by tighter claims management and potential reforms to motor liability that will help improve loss ratios.

The China Insurance Regulatory Commission may announce its risk-based solvency regime in the next few months, Moody’s says.

The regime will prompt stronger and more responsive risk management by assigning capital requirements based on underwriting, credit and market risks. It will also promote a more competitive and divergent insurance market as deregulation continues.

The country’s largest P&C insurer is People’s Insurance Company of China, with a 34% market share, according to Moody’s. AIG Insurance Company China has 0.2%.