AXA sees opportunity in China’s motor market

AXA said in April it was buying 50% of Shanghai-based Tian Ping Auto Insurance for €485 million making it the number one general insurance player among foreigners in China.

Tian Ping was set up in 2004 and is already profitable. Its major focus is motor insurance.

“We believe there is massive potential in the China retail insurance market, particularly in the direct distribution of motor insurance,” Francois-Valery Lecomte, AXA Asia’s chief financial officer told FinanceAsia in an interview.

Five years ago there were 50 million cars in China, now there are 100 million, in 2020 there will be 200 million, according to AXA’s own estimates.

“The number of cars will double in the next five years and our partnership with Tian Ping is ideally positioned to benefit from it,” said Lecomte.

To be sure, China is clamping down on pollution from cars in its cities, but AXA still sees the average value of cars increasing in urban areas. The growth in numbers of cars will come in China’s more rural areas as the country’s economy continues to grow and living standards rise.

Motor insurance open to all


AXA’s China ambitions will be given a fillip by changes in the country’s regulation of insurers. China opened up the provision of third party liability insurance to foreigners late last year. Now foreigners can compete in both compulsory and non-compulsory motor insurance.

In China there are around 600 million internet users and a large proportion of people buying a car for the first time often go online.

About 80% of Tian Ping’s premiums come from distribution through traditional channels and 20% directly. AXA’s strategy is to accelerate Tian Ping’s growth in direct selling.

AXA already sells motor insurance directly to clients in Europe, Korea and Japan and is hoping to use this experience to help Tian Ping. “It’s a true partnership,” Lecomte said.