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Shanghai Insurers to Compensate Losses

Chinese insurers may pay up to 5.6 billion yuan (US$677 million) to cover losses incurred in an accident in an underwater railway tunnel in Shanghai.

China Ping An Insurance Company, China Pacific Insurance Company, the People's Insurance Company of China and Da Zhong Insurance Company have started to evaluate payment issues.

Water leaks appeared in during the building of the metro 4 tunnel running under Shanghai's Huangpu River on July 1 and caused damage to a building above the subway line.

The four Chinese insurers are responsible for construction liability and third party liability, which total some 5.6 billion yuan (US$677). It is estimated that the third party liability scheme involves compensation of 50 million yuan (US$6.05 million).

At present, total losses caused by the accident have not been calculated and compensation has not been paid.

The four Chinese insurers have reinsured most of the liabilities with foreign insurers and the huge compensation payout will not lead to large losses for the Chinese insurance companies, according to a recent report by China Securities.

(China Dailu July 27, 2003)

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