China to set up first farming insurance company

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Last updated at: (Beijing Time) Friday, March 05, 2004

China to set up first farming insurance company

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China's first special agricultural insurance company is expected to start operation soon after obtaining official approval earlier this week from the Chinese Insurance Regulatory Commission (CIRC), the industry watchdog, a move seen by many to change the backwater state of China's farmingin surance industry.

The Shanghai-based Anxin, also the first Chinese-owned insurance company approved by the state in the past seven years, will be set up by 11 companies headed by Shanghai's agriculture commission with a registered capital of 208 million yuan (25.06 USdollars).

Seen as a trial program to establish China's government-aided agricultural insurance system, the company will enjoy the government's financial and policy support for its insurance services in crop production and livestock breeding, while commercially operating agriculture-related property insurance, liability insurance, short-term accidental injury insurance and medical insurance for farmers and reinsurance business.

In addition, preferential disaster-relief policies will be granted by the government in case the company cannot afford through reinsurance farmers' compensation claims incurred by calamities.

In order to cover more farmers in their services, the company'spremium from crop production and livestock breeding insurance is required to be no less than 60 percent of its total premium.

Ren Shixing, the commission's director, said the company is expected to bring in 100 million yuan (12.05 million US dollars) in premiums by the end of next year and over 150 million yuan (18.07 US dollars) by 2007.

At present, China has only two major insurance companies offering agricultural insurance services in the country, namely, PICC Property and Casualty Co., Ltd. and China United Property Insurance Company, which are far from as adequate as both the government and farmers desire.

More trial programs in other provinces or cities will, said CIRC sources, be launched to test the feasibility of the mode of "commercial operation plus financial aid" in running agricultural insurance.

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