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China's insurance regulatory body is drafting rules to allow overseas insurance brokers to enter the country's fledgling market, an industry official said.
The China Insurance Regulatory Commission is in the process of drafting specific stipulations on insurance brokers' operations on the Chinese mainland, which will be suitable for both domestic and overseas players, Deng Xionghan, deputy director of the CIRC's Shanghai Office, said yesterday.
Brokers represent the interest of their clients to obtain the most appropriate terms and conditions on insurance covers. This compares to an agent who represents the interests of an insurance company.
"This will help quicken the development of the insurance-broker business on the Chinese mainland by permitting experienced overseas insurance brokers to join in," said Deng.
Foreign brokers can bring in advanced products and risk management techniques, industry officials said.
So far, only one overseas insurance broker has received the green light from the CIRC to enter the Chinese mainland.
The United States-based Aon Corp was granted a license in January to act as an insurance broker in China through its joint venture with state-backed China National Cereals, Oils & Foodstuffs Import & Export Corp.
"Aon has got special treatment from the Chinese government while other foreign insurance brokers will have to wait," said an official of the CIRC who requested anonymity.
The number of insurance brokers in Shanghai reached 45 by the end of last month, compared with only four companies in 2001, one year after the legislation to authorize brokers went into effect.
Shanghai Everfit Insurance Brokers Inc, funded by ten domestic private companies, became the latest entity to enter the local insurance broker business by starting operations yesterday.
About 26.5 percent of the 18.38 billion yuan (US$2.22 billion) premiums generated by local insurers in the first seven months were collected from brokers, according to Deng.
"With such a short experience and limited number of brokers, the market impact of brokers in China to date has been modest," said James Vickers, managing director of Willis Re, a London-based reinsurance broker.
(Shanghai Daily September 20, 2003)
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