The country's economic restructuring to give consumption more of a role is good news for the insurance industry, he said.

According to Spencer, the company doesn't plan to be the largest player in the market. "We aim to generate underwriting returns, and we will not be seduced by mere rapid growth," said Spencer. "Massive scale never interests us, but we do want to be bigger than the scale we have right now," he added.

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The company is closely watching conditions in the vehicle insurance market, but its focus remains on liability insurance and special financial insurance, according to Spencer. Profit margins in vehicle insurance are regarded as not very attractive.

China's continued urbanization and rising household wealth will sustain the growth dynamics in the country's nonlife insurance sector, but intense competition will further weaken the sector's underwriting margins in 2014, Fitch Ratings Inc said in a report.

In light of contracting underwriting margins, Fitch believes small insurance companies with limited operating scale and less diversified insurance books will post weaker operating results in the coming year.

Nonlife players are likely to see premium growth of 15 to 20 percent over the next 12 to 24 months, according a report by Standard & Poor's Financial Services LLC.

But the segment's performance can be volatile and subject to unexpected natural disasters. Inadequate pricing, or underestimated risk profiles, of commercial property and marine lines in China are likely to persist because of stiff competition, according to S&P.

Major listed Chinese nonlife insurers will still achieve growth in their underwriting surpluses, albeit at a slower pace, because of diverse revenue streams and better spread of risk.

"Ongoing business expansion coupled with slower surplus growth will continue to pose a strain on insurers' capital adequacy, although many insurers improved their solvency adequacy through fresh equity injections or subordinated debt issues over the past year," said Terrence Wong, director of insurance at Fitch.