Local insurers in Asia have benefited from the financial crisis at the expense of foreign-funded companies. The former have seen an increase in market share, while the latter experienced a widespread decline in their market share in Asian countries and regions.

In a new report, After the Flood: The Financial Tsunami and the Insurance Market in Asia, Celent examines the influence of the financial crisis on Asia’s insurance market. The financial crisis brought on an increase in mergers and acquisitions among insurers in the region, altering the competitive landscape. The patterns differ by country, however. In China, a number of foreign companies are hiving off parts of their business with the objective of consolidating their operations in China in order to boost competitiveness. This is in contrast with Taiwan, where some global insurance companies have sold all their local operations and withdrawn from the market.

“During the financial crisis, global insurance companies saw both a decline in the market share of their Asian units and negative growth in overall sales volume,” says Wenli Yuan, Celent Senior Analyst and author of the report. “Firms may be humbled, but they are unbowed. In general foreign insurers are still optimistic about development opportunities in Asia, and the region remains an area of focus.”

The report provides a comparative analysis of domestic and foreign insurers in the region. The market share of foreign-funded life insurance companies differs by country due in large part to varying levels of regulation. The development of the insurance market also varies considerably among Asian countries. In Taiwan, Hong Kong, South Korea, Japan and Singapore, the insurance industry is mature, with a high penetration rate. On the other hand, the markets in developing Asian countries, such as China and India, are still growing and have considerable upside.