|
 |
| An official with the China Insurance Regulatory
Commission (CIRC) said a widely-watched regulation on reinsurance
companies, which encourages insurers to cede premiums domestically,
is expected to come out by the end of this
year.[newsphoto] |
The increasing presence of foreign reinsurers will benefit the
Chinese market with greater underwriting capacity, better
competitive environment and faster technical improvements, the insurance
watchdog says.
An official with the China Insurance Regulatory Commission (CIRC) also
said a widely-watched regulation on reinsurance companies, which
encourages insurers to cede premiums domestically, is expected to come out
by the end of this year. The ceding of premiums means that the insurers
will give part of the premiums to a reinsurance firm, which will share
part of losses when they occur.
"An appropriate level of competition will only do good to the market as
prices and terms will be more fair and services will be better," said Wang
Simiao, deputy director of the CIRC's Reinsurance Regulatory Division, in
an interview.
"But we will prevent excessive competition, or the operational costs
will be too high and endanger the solvency of insurance companies," she said.
The remarks come days after General Re Corporation, a subsidiary of
Berkshire Hathaway Inc, opened its Chinese branch in the nation's
financial hub of Shanghai, following the precedent of Munich Re and Swiss
Re six months ago.
The Chinese reinsurance market, with China Reinsurance Group as the
only current local player, badly needs new underwriting capacity from
global players such as General Re, as the rapidly-growing primary
insurance industry keeps generating huge demand for reinsurance
arrangements, analysts say.
China's insurance industry has boasted an impressive 30 per cent
average growth rate during the past 20 years. Property insurance premiums
surged by 23 per cent in the first half of this year, although the life
sector reported its first decline in a few years as major players trimmed
unprofitable operations.
And although the CIRC has expressed support for local companies setting
up reinsurance businesses earlier this year, they seem to be balking at
the high technical complexity of the business and a lack of expertise and
reinsurance professionals.
"We have not yet received any applications," Wang said.
Instead, foreign reinsurers are currently applying for licences in
China, she said, without elaborating.
Analysts have expressed concern about the impact of growing foreign
competition on China Re, which lags far behind its foreign rivals in terms
of expertise and capital strength.
(China Daily) | 
Updated: 2004-08-10 11:04