They noted that, while China is pouring increasing amounts of funds into infrastructure projects to propel economic growth, the projects are insufficiently covered by insurance. This results in high risks for the project developers - in most cases, the government.

Only 10 percent of the country's fixed-asset investments, which stood at 3.7 trillion yuan (US$445 billion) last year, is insured. In developed countries, nearly 100 per cent of construction projects are covered by insurance.

"That means China's project insurance is still restricted. There is enormous room for growth," Tan Qijian, general manager for property insurance of the People's Insurance Company of China, yesterday told a seminar in Beijing co-sponsored by the insurance firm, the China Development Bank and the China Three Gorges Project Corporation.

Despite progress in recent years, various problems are hindering fresh growth in the business, including a planned-economy-era mindset among project managers who assume that any losses caused by contingencies will be covered by the government, said Ji Qiaoling, chief economist of the China Development Bank.

"Some of them think it's just a waste of money and don't buy insurance or don't buy enough insurance," she said.

She said her bank has made insurance a precondition when lending 30 million yuan (US$3.6 million) or more for projects.

Intensified competition since China joined the World Trade Organization last year have given rise to undercutting and other irregularities among Chinese insurers, Ji said.

Some insurance firms are reluctant to give outward reinsurance to their peers to spread the risk, which erodes their capability to handle claims, she warned.

Seminar participants also urged insurance companies to improve their services and come up with more diverse policies to cater to the increasingly complex risk possibilities in various projects.

Wei Hualin, an insurance professor with Wuhan University in Central China's Hubei Province, urged China's construction authorities to make insurance coverage mandatory in their regulatory rules, as is the case in many developed nations.

Commercial insurance is playing an increasingly important role in guaranteeing the success of China's key projects, with insurers shouldering a growing amount of losses resulted from natural disasters and other contingencies.

The seminar heard that, by the end of July, insurance firms had paid 18.3 million yuan (US$2.2 million) to the Three Gorges Dam project developers in construction project insurance claims.

（China Daily September 27, 2002）