Insurance regulators will try to create favorable environment for the development of domestic insurers in the initial years after China's entry into the World Trade Organization to make them better prepared for the fierce competition, said Ma Yongwei, chairman of the China Insurance Regulatory Commission (CIRC), the industry watchdog, at the national insurance conference yesterday in Beijing.

In the next five years, China's insurance industry will maintain an annual growth rate of about 12 percent. Annual premium income is expected to reach 280 billion yuan (US$33.7 billion) by 2005, up nearly 66 percent from 159.6 billion yuan (US$19.2 billion) last year, Ma said.

But competition will become fiercer as the market opens wider to foreign insurers during the period.

"We should become more liberalized not only to foreign players but also to domestic players, and we should do our best to help them speed up development in this transitional period," he said.

This year, the CIRC will continue to deepen the structural reform of State-owned insurance companies, but Ma said the introduction of shareholders in these State companies is an arduous work which cannot be hurried.

Last year, China's three major State insurers, People's Insurance Company of China, China Life and China Reinsurance, all studied the merits of implementing shareholding systems on a trial basis to enlarge capital assets and introduce advanced management mechanism. Yet no specific methods have yet emerged.

Shareholding insurance companies will be encouraged to expand capital assets and optimize their holders' structure this year by attracting more private and foreign investors.

Most of China's shareholding companies had their major holders from domestic companies. Last year, two shareholding insurers, New China Life Insurance Co and Taikang Life Insurance Co, ushered in several foreign holders and enlarged their capital funds significantly.

This year, the CIRC also plans to debut some policies and regulations to upgrade market structure and cultivate more business fields, Ma said.

The reinsurance, intermediary and rural markets, which are still at the infant stage, are among the priorities of the watchdog agency's development strategy this year, he said.

Some well-established eastern-based insurance companies will be encouraged to extend to the western region this year to activate the western area market.

(China Daily 01/16/2001)