Foreign firms boosts insurance
( 2003-06-17 02:33) (China Daily)
China's vastly underdeveloped agricultural insurance system has been boosted
by the introduction of foreign investment in two key cities in the nation's
west.
As the local insurance authority Monday accelerated its move to throw
open the system, China Insurance Regulatory Commission (CIRC) granted licences
to French insurer Groupama, allowing it to become the first offshore insurer to
set up a property insurance subordinate in Chengdu, the capital of Southwest
China's Sichuan Province.
With the CIRC's permission, the foreign group will
also establish a base in the Chongqing municipality, a key industrial hub
neighbouring Chengdu.
In line with its World Trade Organization commitments,
China opened up Beijing, Tianjin and Suzhou to foreign insurance capital in
March. Foreign insurers have already set up shop in a handful of cities
including Guangzhou, capital city of South China's Guangdong Province.
The
licence approval brought the number of French insurance firms operating in the
promising Chinese market to three. The number of foreign insurers with local
operations now stands at 36.
CIRC officials said the commission expects
Groupama to help China improve insurance protection for its agriculture industry
and farmers, especially in the underdeveloped western areas.
CIRC Chairman Wu
Dingfu said Monday: "In making this approval, we were not only implementing our
World Trade Organization commitments but, more importantly, hoping that Groupama
will play its role in promoting agricultural insurance in China and developing
the central and western areas.''
Wu told Groupama President Jean Azema that
his firm will have much to achieve in China as the market potential for
agricultural and farmer insurance is prolific after economic reforms have
propelled the rural economy and increased farmers' incomes in recent
years.
The CIRC is actively examining the issue of policy-oriented
agriculture insurance, as well as ways to encourage both Chinese and foreign
insurance companies to provide commercial agriculture insurance, Wu
said.
While agriculture accounts for 20 per cent of the gross domestic
product in a country with an agricultural population around the 1 billion,
China's agriculture insurance is embarrassingly underdeveloped. Agricultural
premiums were below 1 billion yuan (US$120 million) in 2001, compared to 210
billion yuan (US$25.3 billion) in total insurance premiums.
China relaunched
agriculture insurance in 1983 as part of its market economy reform, but it hit
the skids as early as 1993 when compensations soared, forcing the People's
Insurance Company of China -- the then sole agriculture insurance provider -- to
withdraw from areas of heavy losses.
Caught between profitability concerns
and the government's desire to protect farmers, analysts said Chinese insurers,
especially younger companies, have been reluctant to take up the risky
agriculture insurance business.
The CIRC plans to send delegations in the
near future to European countries, including France, to tap their experience in
developing policy-oriented insurance for agriculture and farmers, officials
said.
At a ceremony Monday, Wu said the licence for Groupama also
demonstrated the deep friendship between the governments and insurance circles
of the two countries.
Azema travelled with French Premier Jean-Pierre
Raffarin when the latter visited Beijing in late April amid widespread panic
over the SARS epidemic.
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