CIRC Vice-Chairman Wu Xiaoping said CIRC would vigorously push forward the system reform of exclusively State-owned insurance companies. Measures will be taken to rationalize their ownership in light of requirements of the modern corporate system and through multiple forms such as equity participation, joint venture and going public. A modern corporate management structure will be established to form an effective internal incentive and restrictive mechanism. Chinese joint-stock insurance companies will be encouraged to absorb foreign, private and public businesses as shareholders to enhance their capital strength and service capacity. Qualified companies will be encouraged to go public.

Wu said CIRC will speed up efforts to improve the examination and approval system for domestic joint-stock insurance companies that conform to the modern corporate system, and give a green light to qualified joint-stock companies to increase business outlets to enhance competitiveness and enlarge market shares. Geographical restrictions on the operation of regional insurance companies will be removed, and those qualified will be allowed to set up branches anywhere in China. Efforts will also be made to improve the environment for operation and competition so as to ensure orderly market competition and sound development.

Major domestic insurers said they have been ready to face possible pressure and competition, while greeting opportunities brought by China's WTO membership.

Sun Jianyi (Executive Deputy General Manager of Ping An Insurance Co. of China): There will be two years before China totally opens its insurance market. Chinese insurers should make full use of this period to enhance their capital strength while improving managerial expertise in an all-round way.

Chen Dongsheng (Chairman and CEO of Taikang Life Insurance Co. Ltd.): Within a considerably long period after China's WTO entry. Chinese and foreign life insurers will concentrate their competition in the newly emerging domestic life insurance market. Only with good business ethics and a well-established legal system and credibility can the Chinese insurance sector grow fast and steadily.

Wang Zimu (Chairman of Huatai Insurance Co. Ltd.): As a developing country, China will enjoy a buffer period between joining the WTO and completely performing its obligations according to the WTO Agreement on Financial Services. We should take advantage of this period to accumulate our strength.

Guan Guoliang (Chairman of New China Life Insurance Co.): China's WTO membership puts Chinese State and non-Slate enterprises, foreign businesses and joint ventures on the same platform and at the same starting point. Thus they can determine their strategy in line with the WTO rules. For Chinese enterprises, this is an opportunity for development.

Wang Guoliang (Chairman of Pacific Insurance Co. Ltd.): Multiple investment instruments provide important conditions for survival and development of the Chinese insurance sector. We should follow the law of market economy and truly gear ourselves to the market orientation.

He Jiesheng (Chairman of China Insurance Association): With an influx of foreign insurers into the Chinese market, and the enlivening of the Chinese economy following its overall integration with global economy, Chinese insurance businesses will hopefully grow stronger during the competition with multinational conglomerates. In the interim, the Chinese insurance market will become mature.

Legal Preparations

Meng Zhaoyi said CIRC is rectifying insurance laws and regulations contradicting the WTO rules and the Chinese Government's commitments. It is studying and formulating corresponding regulations to deal with the challenges brought by WTO entry.

The Regulations on Management of Foreign-Funded Insurance Firms, drafted by CIRC, has been submitted to the Stale Council for approval and will soon be promulgated. In addition, three other statutes governing insurance intermediary services, including the Regulations on Management of Insurance Brokerage Agencies, have been promulgated.

For many years, foreign insurance firms often complained that they lacked rules to follow while applying for business licenses in China. Such a situation will alter when relevant regulations come into effect. In future, related regulatory authorities will publish, in advance, examination and approval conditions and procedures for foreign insurance companies to apply for a business license in China. All examination and approval procedures should be completed and the applicant informed of the result within six months after the application is accepted.

Amendment to the Insurance Law has also been put on the agenda. Although the law has only recently come into effect, many of its terms obviously cannot cater to the needs of the insurance market development. Therefore, calls for its revision have risen, and it is reported that relevant work has already started.

CIRC Chairman Ma Yongwei said the Insurance Law has played a positive role in promoting the development of China's insurance market. However, he stressed, in light of the current situation of social and economic development, the law needs to be amended and supplemented. For instance, the regulations on fund operation provided by the law are not suitable for the current trend of a sharp increase in premium revenue, because effective operation of insurance funds is crucial to the steady development of the insurance market and the protection of the interests of the insured.

CIRC will make good preparations for the revision of the law so that it can be put on the agenda of the National People's Congress - China's top legislature - at an early date, Ma said. Meanwhile, it will also urge the Stale Council to promulgate the Methods for Penalty for Insurance Violations, thus further improving the insurance regulatory system.

Competing for Qualified Personnel

In the coming two to three years, more foreign-funded insurance businesses will appear in Chinese cities opening to foreign insurers. Qualified insurance professionals will then become targets contended for by both Chinese and foreign firms. Foreign firms are likely to target their contention on medium- or high-level staff in Chinese insurance companies. Well-experienced and capable, these people also have long-established business contacts. To get these people, foreign insurers are ready to provide generous packages, which will form a threat to Chinese insurance firms.

Actually, foreign insurance companies that entered China several years ago have already amassed a group of talented Chinese staff. General manager of AIU Shenzhen Branch said most of the company's 70 staff members are local citizens; only he and one other administrative personnel came from the Hong Kong headquarters. Besides the factor of cost, China actually has many talented people, he said.

While contending for local qualified personnel, foreign insurance businesses have spared no efforts to cooperate with Chinese institutions of higher learning to train the special professional they need.

In 1994, British CGNU Group reached an agreement with the Southwest China University of Finance and Economics to set up the China Training Center for Insurance Accountants. The center offers Master's degree courses for postgraduates majoring in insurance accounting. So far, more than 70 Chinese students have graduated from the center.

American International Group has played an active part in financing the MBA program of Guanghua School of Management of Peking University. It has also cooperated with Fudan University in Shanghai and Zhongshan University in Guangzhou to set up insurance actuary centers.

The Lincoln Financial Group, which ranks 32nd in the latest Fortune 500 in terms of total assets, established an insurance faculty jointly with the School of Economics of Peking University. It also has cooperative ties with Hunan Institute of Finance and Economics and Fudan University.