Guangdong should open up its insurance market to Hong Kong firms, Mr. George Lung, a senior manager with Manulife HK and a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), told China.org.cn today. Manulife HK, founded in 1897, is one of Hong Kong's biggest financial institutions.
In January this year, the National Development and Reform Committee (NDRC) published a 12-year development plan for the Pearl River Delta that slated the region as a testing ground for economic reform. The plan gave prominence to consolidating Hong Kong's status as an international financial center.
"This is a great opportunity," Mr. Lung said, "Guangdong can take the lead in reforms such as opening its insurance market to Hong Kong."
Mr. Lung, who has been in the insurance business for almost two decades, has submitted a proposal to the CPPCC on opening up the mainland insurance industry.
Liberalization of the insurance sector started in 2001 after China joined the World Trade Organization (WTO). Since then China has torn down a number of barriers, lifting bans on regional control, allowing joint ventures and, later, solely-owned companies.
A June 2003 agreement reduced the requirements HK insurance companies had to meet to enter the mainland market. But so far, Mr. Lung says, most HK insurers still haven't seen benefits from these policies.
"The policy works better for large, competitive insurers from the western countries," Mr. Lung said, "HK insurers are mostly small-and medium-sized companies, far less competitive than their U.S. and European rivals when negotiating with potential mainland partners."
Mr. Lung said the government should lower the barriers keeping Hong Kong insurance companies out. "If it was easier for HK and mainland insurers to form joint ventures, smaller insurers will be able to cooperate and combine their strength and competitiveness."
The government plan calls for mutual recognition of professional qualifications for the securities, insurance, accounting and medical care industries. HK and the mainland have been working on recognition of insurance qualifications since 2004. Since February 2004, HK citizens have been allowed to participate in mainland qualifying examinations, and in 2008, the mainland set up test sites in HK. But due to the language barrier and differences in educational background, the uptake has not matched expectations.
Mr. Lung wants the mainland and HK to set up an independent qualification recognition organization "just like the Million Dollar Round Table (MDRT)". [The MDRT is an international association of insurance agents established in the USA in 1927].
"The organization should formulate a set of business performance requirements as well as codes of conduct, and only insurance practitioners that meet these requirements would be accepted into the organization," said Mr. Lung.
China could build its own version of the MDRT, and HK is willing and able to take the lead in doing this, Mr. Lung said.
Mr. Lung also said regulations concerning mainland purchases of overseas insurance policies need to be clarified. While it is legal for mainland residents to buy insurance policies from overseas companies, it is illegal for overseas companies to engage in active selling on the mainland. This is affecting the after-sales services of overseas firms as it is unclear whether such services are lawful. Mr. Lung said the government needs to clarify the issue as soon as possible.
Mr. George Lung is Senior District Director of Manulife HK, one of HK's biggest financial institutions. He was elected to the Chinese People's Political Consultative Conference (CPPCC) in 2005.
(China.org.cn by Yan Pei, March 9, 2009)