CIRC: Stage open to profession foreign insurers

More than half of the 61 insurers in China are funded by foreign investment since China opened its insurance market to foreign capital. Foreign-funded insurance companies are an integral part of China's insurance system, said Wu Xiaoping, Vice Chairman of China Insurance Regulatory Commission (CIRC), the watchdog of the industry, at a financial service forum in Beijing on June 30.

37 foreign insurers and 24 Chinese players makes up the 61 insurance businesses in China. Foreign insurance companies held 19.78 billion yuan assets in 2003, compared with 4.4 billion yuan in 1999. 15 Chinese cities are open to foreign insurers.

In addition, foreign insurers have high interest in taking stakes in their Chinese partners.

Ping'an Insurance, one of China's leading insurers listed in Hong Kong, has its 23.74 percent shares held by its foreign investors, including Morgan Stanley, Goldman Sachs, and HSBC. New China Life Insurance, Taikang Life, and Huatai all have overseas strategic investors which hold 24.9 percent, 25 percent and 22.13 percent of shares respectively.

Wu reiterated China's commitment to WTO on insurance sector where geographic restrictions on foreign capital would be lifted as scheduled. Detailed directions on implementation of rules governing foreign insurance companies will be promulgated to make sure these companies enter into the market and run their operation in compliance with the law.

China prefers foreign insurers specialized in policies covering health, pension, agriculture and catastrophes now, said Wu. And foreign insurers are encouraged to make presence in China's western areas and the old industrial base in the northeast.

Wu highlighted the roadmap for the development of China's insurance sector. He noted that insurance companies would further improve their corporate governance through absorbing foreign capital and private investment.

Chinese insurance companies are allowed to raise fund in foreign capital market. They are encouraged to extend their business to overseas market where they compete with global counterparts through various ways including capital operation.

In his outlook for China's insurance sector, there will be a diversified insurance service system and insurance giants with international competitiveness. Mergers and acquisitions are possible among insurers to make corporations which are specialized in specific business and have subsidiaries complimentary one another.

Wu also mentioned CIRC's plan to foster the reinsurance market. Insurance companies can set up reinsurance operations with stakes from various other investment. The aim is to make China's reinsurance sector stronger.

Professional insurance broker agents are to be motivated to run in innovative business models and give a full play to their advantages in specific insurance services.

An unified, open insurance market system with fair competition and Chinese features will be ready, Wu concluded.

By People's Daily Online