Experimental feature

Listen to this article

00:00
00:00
Experimental feature
or

A patient but persistent 26-year campaign to enter the Chinese insurance market has paid off for Marsh, with the company’s local subsidiary last week becoming the country’s first wholly foreign-owned insurance broker.

Paul Wilkins, greater China managing director for the US-based Marsh, said he will seek to focus on serving Chinese companies planning to list or expand abroad. Local companies now comprise just a fifth of Marsh’s mainland client base, with multinationals making up the balance, but Mr Wilkins forecasts that local firms will represent half the total in three to five years.

Marsh in 1981 became the first foreign insurance- related company to establish a presence in reform-era China when it opened a representative office that was not allowed to handle any business, according to Mr Wilkins.

Marsh has continued to extend its operations incrementally ever since, through high-profile work including assisting China’s space programme with overseas risk placement and helping with preparations for the 2008 Beijing Olympics and the Three Gorges dam project. However, operations within China have until now been restricted largely to risk consulting. It has only been allowed to provide advice to local companies since 2003.

Marsh will now be competing with about 300 insurance brokers in China, including joint ventures involving a number of global rivals such as Willis Group Holdings.

“This is the final big step,” Mr Wilkins said. “Before, we were just providing risk advice, [but] now we can provide a whole suite of services.”

The new objective is cross-border business, mainly enterprises planning to list abroad or venturing into emerging markets such as Africa or Latin America.

“Each one of these steps has bigger liabilities,” he said. “We follow where the business is.”

Marsh might, for instance, help Chinese companies with overseas operations draft global insurance programmes, or work with domestic insurers to devise international re-insurance schemes.

Mr Wilkins said the insurance company would also seek to assist Chinese companies with overseas business in retaining the services of foreign insurers, then have that coverage re-insured in the
mainland.

As the new licence has no geographic limits, Marsh is planning to open an office in the south-western city of Chengdu to complement its existing operations in Beijing, Shanghai and Guangzhou. Mr Wilkins said the company is also studying the establishment of an office in the north-east.

“The industry itself is pretty new,” said Mr Wilkins. With its limited operations in China to date, the country represents only about 1 per cent of Marsh’s global revenues.

Sister units of Marsh & McLennan are also active in China, with Mercer Human Resource Consulting experiencing revenue growth of about 50 per cent a year. Michael Cherkasky, Marsh & McLennan’s chief executive, earlier forecast that group sales would increase five-fold by 2009.

Copyright The Financial Times Limited 2017. All rights reserved.
myFT

Follow the topics mentioned in this article

Comments have not been enabled for this article.