Foreign insurers expect little progress in expanding their market share in China in the next three years as competition from local rivals intensifies.

The accounting firm PricewaterhouseCoopers (PwC) recently conducted a survey of over 28 foreign insurers operating in China, and more than half the respondents estimate that their China business has grown 20-40 percent in 2011.

But seven out of the 18 life insurers expect their market shares to be unchanged at 5 percent in 2014, and six of the 10 property and casualty insurance firms forecast their slice to remain at around 1 percent, the lowest foreign presence in Asia.

Tom Ling, PwC insurance leader for China, said growing competition with domestic insurers and banks and a shortage of talent are the greatest barriers for foreign insurers.

"Besides operating in a constantly evolving environment, they have to contend with the increasing dominance of domestic insurers and with banks encroaching into their traditional marketplace," said Ling.

Despite the daunting challenges, foreign insurers still see China as a crucial market.

"Selecting the right business model to capture China's growth potential will be key," said Alex Wong, PwC China financial services partner.

"Some foreign insurers are particularly looking forward to the increasing internationalization of the yuan, a move they believe will present a better chance to differentiate themselves by encouraging greater product innovation and providing better hedging opportunities," Wong added.