With the pace of economic recovery slow in mature insurance markets, property and casualty carriers have set their sights beyond the United States and Western Europe–eyeing opportunities in developing regions of the world, analysts report.

“Developing economies such as China and India are expected to attract insurance capacity,” New York-based Advisen said in a recent report titled, “The Insurance Market in 2011: The Lingering Effects of the Recession Fuel Competition.”

Advisen said a beneficial consequence of p&c insurers’ activities to spread capital over a wider global base could be to modulate swings in the market cycle going forward. Experts caution, however, that new markets come with a new set of risks, and that the doors to these new areas of opportunity are not simply swinging wide open for insurers.

Robert Hartwig, president of the Insurance Information Institute noted that markets such as China and India are difficult to penetrate due to byzantine regulation and requirements for insurers to be substantially or majority owned by domestic companies.

He suggested not just following the money trail into China, but rather following areas in the world where the Chinese are making investments. “Some of these places offer the greatest opportunity for insurers to grow,” he said.

China, Mr. Hartwig said, is making investments in areas such as Africa, South America, Australia and elsewhere in Southeast Asia. As China invests in these areas, industries that did not previously exist in the regions will emerge, and these new industries will need insurance, he said.

The economic downturn has “reshuffled the global economic deck,” Mr. Hartwig said, noting that this strategy of finding emerging markets will be the way of the future. “While it is assumed China is the winner, China does not do this on its own.”

Mr. Hartwig compared a strategy of following China’s investments to insuring wherever the British Empire went in the 19th century, or wherever the United States went in the 20th century. “That would have been a lucrative enterprise,” he said, noting that history could repeat here in the 21st century with China.

The downside to this strategy, he said, is that the areas of greatest opportunity are “prone to significant political risk or are in economically volatile regions of the world.”

Every dollar of growth insurers see abroad, he said, comes with greater risk. “A dollar of growth in Vietnam or in Egypt comes with greater risk than a dollar of growth in Oklahoma or Belgium,” Mr. Hartwig said.

Before entering a new market or industry, insurers must do their homework on the regulatory environment and customs of the countries and regions.

As one possible roadblock, Mr. Hartwig said that in some of these regions, the concept of insurance is alien. The owners of a factory in Vietnam, for example, may not consider that they could be sued for product liability in the United States.

“This is not in the culture,” Mr. Hartwig said, adding that insurers have to educate buyers on the concept of insurance. “It’s not a matter of knocking on the door and saying, ‘I want to be your insurer.’”

Mr. Hartwig recommended bringing multiple partners, reinsurers, and knowledgeable local parties into the process. Some ventures will work out, he said, while others will not, and it could take 20-25 years to bring new markets online.

But it is possible. Mr. Hartwig cited Chile as an example of a country that is now part of the industrial world when it comes to insurance.

Advisen, in its recent report, said it does not expect a mass migration to emerging markets to be a significant factor in 2011, but notes that the movement over the long term could help relieve overcapacity in developed markets going forward.