Shanghai's investment-linked products grew rapidly last year with overseas insurers the main players, the local regulator said yesterday.

Insurers in Shanghai are faced with challenges including the tightening monetary policy and fluctuations of the stock market.

Shanghai accounted for 18 percent of China's total investment-linked insurance market while overseas insurers contributed to a 73.22-percent share of that market in the city.

Overseas insurer's investment-linked insurance premiums grew more than 10-fold last year in Shanghai as insurers promoted products whose performance was linked to last year's bullish capital market.

The benchmark Shanghai Composite Index grew more than 80 percent last year after soaring 130 percent in 2006.

Investment-linked life insurance is a plan where the value of benefits are, wholly or partly linked to the investment performance of a separate investment-linked fund. When a policy owner pays a premium for the policy, a portion of the premium will be allocated to insurance while the balance will be made to buy units in the investment-linked funds.

There is a question as to whether insurers can sustain the rapid growth of this type this year when the capital market is so uncertain.

Property and casualty insurers also face challenges this year after making large payouts following the worst snowstorms in the city in half a century.

Property and casualty insurers have received 42,197 claims for a combined loss of 910 million yuan (US$127.1 million) up to February 15. Insurers have already paid out 20.08 million yuan. Life insurers have received 450 claims asking for total payment of 3.2 million yuan.

Insurers collected premiums worth 48.26 billion yuan last year in Shanghai, up 19.43 percent on the previous year.

(Shanghai Daily February 22, 2008)