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China will approve more foreign insurers to sell policies in this fledgling market, in keeping with the commitment the country made when joining the World Trade Organization (WTO) in December, a senior official said yesterday.
"We are checking a number of applications now, and as long as they meet all the criteria, we will give them the green light as soon as possible," said Li Kemu, vice-chairman of the China Insurance Regulatory Commission (CIRC), the market watchdog.
The central government has vowed to create a fair market for all insurers, Li said.
More than 30 foreign-funded insurers have already been operating in China since the market opened in 1992.
Introducing foreign competition enables China to learn from the foreigners' technology and management expertise so as to foster development of China's insurance sector, Li said.
The focus of State regulations will gradually focus more on solvency capacity supervision and less on supervising insurers' business directly, Li told 280 seminar participants in Shanghai.
The four-day conference was organized by the Asia-Pacific Risk and Insurance Association. It brings together regulators, market players and researchers in the region to discuss the impact of an open market policy on emerging insurance markets.
Experts said that by monitoring the ability to meet the obligations in claims and payments, regulators can obtain better and more comprehensive insight to measure an insurance company's operation and financial status.
CIRC is clearly transforming from a direct management government body into a supervisory department. In simpler terms, this means CIRC is no longer a team leader, but an industry referee.
"This is a significant change, which is part of our efforts to create a more healthy and stable competition environment for all the players," Li said.
He also said CIRC and related government bodies are revising the insurance law to create a better and more accessible market for foreign insurers.
China's insurance industry has enjoyed rapid growth in the last decade, making it one of the most lucrative markets for insurance companies.
Life insurance grew by 43 per cent while non-life insurance grew by 15 per cent last year.
In the first six months of this year, life insurance soared by 84.4 per cent to 118.7 billion yuan (US$14.5 billion) in premiums while non-life insurance grew by 12.7 per cent to 42.1 billion yuan (US$5.1 billion).
Li said that taking some benchmarks into consideration, China is expected to sustain a strong momentum in its growth in the coming years.
Last year, the insurance density (average per capita premium) exceeded 168.8 yuan (US$20.38). The penetration rate (percentage of premium income in GDP) was 3.6 per cent.
"Compared with developed countries, China's insurance industry has huge growth potential," he said.
(China Daily July 23, 2002)
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