Under the Lloyd's structure, insurers form syndicates to sign contracts. According to this model, the key in China is to build relationships with local insurers and let them push the business.
Lloyd's has hired Eric Gao, who previously worked for Swiss Re, to lead its China operations, with about 25 people working under him.
"It is a matter of having people on the ground, leaving their office and meeting the local business community," says Ward.
In addition to the domestic market, insurers could also profit from Chinese companies operating overseas. For example, China Ocean Shipping Company is increasing the number of vessels it has around the world and needs to insure them. Similarly, the aviation industry operates globally and needs overseas insurance. This will create opportunities for specialist insurers, Ward says.
However, there are issues for international insurers looking to expand in China. Above all, Chinese people differ from Westerns in their attitude to risks. Chinese companies are better known for hard work than taking risk.
"It will take a while for Lloyd's to understand China in the way it understands other markets and vice versa," says Nelson.
Regulatory and judicial systems in China are still developing and could also be a barrier. In the UK, the judicial system is highly developed and trustworthy. This is a precondition for Lloyd's operations.
"In order for the Chinese insurance market to develop, China needs to develop the same kind of reputation," says Ward.
Lloyd's business model also faces potential domestic challenges. For example, Shanghai is considering opening its own insurance exchange.
"We all compete with each other," says Ward. "But it is difficult to replicate a market. It is not something you build from scratch."
With more communication on both sides, things may improve. Chinese insurers are sending people to the West to learn about business practice. China Reinsurance Corp, the largest reinsurer in China, last year joined Lloyd's and became the first Chinese member of the market. It put $50 million into a syndicate along with Catlin, the biggest insurer in the market.
Lloyd's also wants to increase the number of Chinese nationals working in London. At the junior levels, it plans to hire from China's large student population in the UK through its graduate program. It also plans to send staff from Shanghai to London. The intention is that these Chinese nationals take their experience of China to London, and then return to China with a better understanding of the global insurance market.
"Creating business footprints both ways will create more connections and more business," says Nelson.
This year China Re sent six people to work in London. Steven Catlin, chairman of Catlin Group Limited, says it also sends its people to work at the sites of Chinese insurers to learn about how they do business. Catlin opened its second China office in Beijing this year, following an earlier one in Shanghai.
"As the Chinese economy develops, and as the Chinese insurance companies become more sensitive to their own internal capital, there will be a healthier market in which we can operate," says Nelson.
diaoying@chinadaily.com.cn
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