These companies include top players from all three major categories of insurance - life insurance, non-life business and reinsurance.

Leading the queue are the Britain-based Standard Life Insurance Co, US-based Liberty Mutual Insurance Co, Japan-based Sompo Japan Insurance Inc and Switzerland-based Swiss Re, the world's largest insurance company by assets.

The regulatory watchdog of China's insurance sector, the China Insurance Regulatory Commission, on November 1 gave the nod to the first of these three foreign insurers extending their business into China.

It had earlier given the green light to Swiss Re, a much anticipated move in accordance with China's World Trade Organization (WTO) accession.

"We are now busy preparing for the opening of our branch," said Gao Cong, chief representative of Swiss Re's Beijing representative office.

Swiss Re was given the licence to establish a wholly owned branch to offer national reinsurance coverage to its targeted Chinese customers, which will include both life insurance and non-life insurance companies.

"The new branch will allow us to build up much closer business tie-ups in China's market to cope with the rising demand for high-quality reinsurance services," Gao told Business Weekly last week.

"We are considering either Beijing or Shanghai for the base of the new branch," said Gao on the sidelines of a training conference. Most Chinese insurance companies are based in one of the two business hubs.

As well as doing routine work such as recruiting and training employees, the company is now required to inject paid-in capital worth 300 million yuan (US$36.23 million) as a registered fund to start its business in the market.

Moreover, the company is still waiting for the implementation of expected new provisions for the establishment of reinsurance companies - a new regulation that is expected to be released by the insurance watchdog following the amendment of the Insurance Law to better oversee the reinsurance market.

Compared with the burgeoning domestic direct insurance market, China's reinsurance market is very underdeveloped and the market is still monopolized by the State-run China Re.

"But the new rules will not have much impact on the launch of our business as the CIRC has already contacted us about the details and the result (of the contact between the insurance watchdog and Swiss Re) is encouraging," said Gao.

The Chinese mainland's insurance market witnessed robust growth last decade, with an annual growth by premium income of 18 per cent on average. By the end of 2001, the Chinese mainland had 52 insurers, including five State-run companies, 19 joint ventures and 13 branches of foreign companies. In 1997, the mainland was home to only eight Chinese insurance companies and three foreign-funded insurers.

Of the newly approved companies, the most active one is Sompo Japan, which offers a wide range of non-life coverage, including fire, marine, inland transit, and other services to its customers.

"We hope to bring our services to customers in China as soon as possible," said Yasuo Shinozaki of the company's general representative office in China, based in Beijing.

As of today, the company has six offices in major Chinese cities, namely Beijing, Chongqing, Dalian, Shanghai, Shenzhen and Hong Kong.

The company plans to launch its first branch early next year in Dalian, a business hub in Northeast China's Liaoning Province, which is home to many Japanese-funded companies.

"Our major customers will be Japanese companies operating in China, whose business links are expected to greatly expand following China's WTO accession," Guo Yue, another senior official with the office, said in an exclusive interview with Business Weekly last week.

Another major reason for choosing Dalian as the venue is that there is little competition but considerable business opportunities in Dalian compared to cities such as Shanghai and Guangzhou, said Shinozaki.

As a second part of its strategy, the company plans to further extend its operations into Shanghai and South China's Guangdong Province, where many Japanese companies are also based.

Compared with Shinozaki's enthusiasm, John Kimber has a more sombre outlook.

"We are extremely happy with the licence that we have been awarded as we have already prepared for years for the go-ahead," said John Kimber, managing director of Liberty Mutual's China Development.

The licence allows the US-based insurer to establish a wholly owned branch in China to offer non-life insurance services.

But the company had planned for years to establish a non-life branch in Chongqing, a business hub in Southwest China. This goes against China's current WTO commitments, which only allows a foreign presence in five coastal cities, namely Shanghai, Guangzhou, Dalian, Shenzhen and Guangdong Province's Foshan.

But China also agreed with the WTO to open another 10 cities, including Chongqing, within two years of its December 2001 accession.

"We will work closely with the CIRC and establish our branch in line with China's requirements," Kimber told Business Weekly in a telephone interview.

(Business Weekly November 19, 2002)