Today, the market share of foreign insurers in this city stands at 13.6 percent. By the end of 2001, it had 14 foreign insurance companies including American International Group, AXA of France and Allianz of Germany, and was equally represented by property and life insurance. As many as 20 more firms have obtained permission to operate since then, but most of them are yet to begin operations.

Foreign companies have witnessed impressive growth in Shanghai and generated insurance revenue of $386 million (3.2 billion Yuan) in 2001, according to the China Insurance Regulatory Commission.

In Shanghai, foreign life insurance firms captured 14.4 percent of the market while non-life players got 6.7 percent of the market, CIRC said. Shanghai offers an attractive market with 16 million residents and a gross domestic product worth $4,500 dollars per capita.

In May, China's urban and rural individual savings deposits surpassed $966 billion (8 trillion Yuan), according to the Peoples Bank of China, the central bank.

CIRC deputy chairman Feng Xiaozeng said that by the end of 2001, total premium income of the insurance industry was 219 billion Yuan, and 1.58 percent of it has gone to the foreign firms.

There were 20 domestic insurers and 32 foreign firms operating at that time. Market sources said that analysts hired by some of the foreign insurance firms have indicated to their employers that the share of foreign funded insurance companies can go up to 40-50 percent in 20 years. CIRC had earlier calculated that China accounted for 0.8 percent of the global premium income of US$2.4 trillion in 2000 when the countrys premium income stood at US $20 billion.

According to Wu Xiaoping, chairman of the China Insurance Regulatory Commission, a total of 34 foreign insurers have now been granted licenses. Another 112 insurance firms from 19 countries have set up liaison and administrative offices in the hope of obtaining licenses.

More Chinese cities are expected to open up to foreign players as China gradually lifts regional controls for foreign insurance companies. These cities will include the capital of Beijing, which has already begun to open up, and also cities like Guangzhou, Dalian, Shenzhen, Foshan, Chongqing and Chengdu.

American International Assurance Company, the Lewistown, Ind.-based company, opened a Beijing branch on June 7, becoming the first foreign insurer to launch operations in the capital city.

“We are satisfied with our achievement here. What we have learned in Shanghai will help us to explore more of the Chinese market,” said Xu Zhengguang, general manager of AIA Shanghai branch. The company offers pension insurance, insurance schemes for children's education fees and medical covers in Shanghai.

“China is one of the markets that experiences the most rapid growth in the world. We expect that our premium will see a 25 percent growth in China this year”, said Maurice Greenberg, chairman and chief executive of American International Group, at a branch opening ceremony in Beijing recently.

ACE Group has signed a deal with Huatai Insurance, Chinas fourth largest property insurer, under which it will buy 22.13 percent of Huatai shares for $150 million, from 63 different Huatai's domestic shareholders.

Sunlife Insurance of Canada has joined hands with China's Everbright Group and set up a joint venture in Tianjin, which is close to Beijing. James Boonzaier, group managing director of Tower Corporation Holdings Ltd. of New Zealand, announced the company had set up an office in Beijing and hoped to obtain a license shortly.

Beijings city mayor Liu Qi has said he expects more international insurance companies to start business in the city. He made the statement after a meeting with Henning Schulte-Noelle, board chairman of the German insurance giant Allianz AG, which hopes to establish a significant presence in Chinas capital.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 8, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.