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Willis sees success in rapidly growing China

Willis sees success in rapidly growing China

SHANGHAI—Much like China's economy, the footprint of London-based Willis Group Holdings P.L.C. in the Chinese insurance market has expanded rapidly in recent years.

In 2004, Willis entered the market through the acquisition of a 50% equity stake in Chinese insurance broker Shanghai Pudong Insurance Brokers Co. Ltd. A year later, Willis increased its stake in the venture to 51%, making it the first foreign-controlled broker in China, and renamed the venture Willis Insurance Brokers Co. Ltd. in 2007. Willis increased its equity stake to 90% in 2010 and has the largest insurance broking network and workforce of international brokers in the country, employing 350 associates throughout the country, the company says.

“China is one of Willis' greatest success stories,” said Roger Wilkinson, chairman and CEO, Willis Asia Pacific, Middle East and Africa. “With consistent double-digit annual growth, China became our largest business in Asia in 2010.”

Yet with this success comes challenges, Mr. Wilkinson said.

“The biggest challenge by far is recruiting and retaining the best people,” he said. “There is a real war for talent here; not only are we competing with other brokers and insurers who are rapidly growing in number, but as the insurance broking industry in China is only 10 years old, it is not as easy to find the right people like it is in the U.S. or the U.K., for example, where the industry is more developed.”

The talent war is but one front in a fiercely competitive landscape. Competition among insurance companies is very intense, he said, so market pricing is extremely competitive.

“Insurance prices here are generally far cheaper than those in the more developed insurance markets of the world,” Mr. Wilkinson said.

With an estimated 400 brokers operating in China, the competitive dynamic is similar for brokers.

“All the multinational brokers are here, along with some very strong pan-China brokers, regional brokers and powerful in-house brokers in large corporations,” he said. “In order to differentiate ourselves, we focus on delivering the group's global resources locally, especially in the large corporate space.”

China is less a singular insurance market than an amalgamation of local markets. Mr. Wilkinson said that while some areas like Shanghai are more westernized in their approach to insurance and the use of intermediaries, business practices vary widely in other regions.


“Cultural and regional differences still play a big part in the Chinese business environment,” he said. “In recognition of this fact, we have local offices in 21 of the 31 provinces and ensure that these branches are staffed by people from the region.”

While business practices may differ by region, the insurance market in China is regulated by a national entity—the China Insurance Regulatory Commission. While all policies have to be approved by the regulator, Mr. Wilkinson said the company has found the operating environment in China is generally fair and conducive to business.

“The only real downside for foreign brokers in China is that we don't have access to the full market, as we're not allowed to be handle small and lower mid-market business, which is the reserve of local brokers,” he said.

However, there are indications of further liberalization of market. In February, China announced that it would open up its mandatory third-party liability auto insurance system to foreign insurance companies.

“Motor insurance represents around 70% of the total property/casualty premium payable in China, so the opening up of this market to foreign insurers represents a huge opportunity for them. This development should drive the competition and demand for nonmotor business too, which will increase the need for brokers' services in China.”

Insuring China's growing property business holds great potential, as do policies serving the marine, construction, energy and aerospace markets, Mr. Wilkinson said. Formerly state-owned companies who haven't bought insurance in the past but are now looking at their risk management process also harbor great potential in his estimation. Insurance services catering to China's most seemingly infinite resource—its people—also represent an opportunity. In the absence of a government-funded benefits system, private companies in China are increasingly using employee benefits as a retention tool, Mr. Wilkinson said.

“The expanding population and middle class represent huge opportunities in the area of employee benefits as more people become employed,” he said.