China's insurance regulators have vowed to continue a clean-up campaign in an effort to present a healthy market to the world once China enters the World Trade Organization (WTO).
"It is conceivable that China will enter the WTO before the end of this year and in that case there will be great challenges and opportunities for the insurance industry," said Wu Xiaoping, vice-chairman with the China Insurance Regulatory Commission (CIRC), the industry watchdog.
"If we do not restore order to the market, it will be very difficult to adapt to the whole set of rules and regulations of the WTO once we join it," said Wu at a conference last week summarizing the first phase of the clean-up work.
The market is still in disorder, which makes it difficult for sustainable growth of the industry to be realized, he said.
"The industry still lags behind in terms of management level, personnel quality and competitiveness," said CIRC Chairman Ma Yongwei.
Strengthening regulations of the market at the moment is of vital importance in preparing it for WTO entry, he added.
The CIRC started a nationwide "purification" move in April this year, to run through August. During the event, insurers are asked to examine their behavior in all aspects and work out methods to rectify wrongdoings.
As a result, China's insurance industry has realized sustainable growth in the upper half of this year and has been making huge strides, said Feng Xiaozeng, another vice-chairman with the CIRC.
Although specific figures still need to be verified, Feng hinted that both life and non-life insurance had been developing at a much faster pace in the first six months of this year compared with last year.
But there still exist problems in some areas and companies, he added.
Some companies had set up operational institutions or appointed senior management staff without the permission of the CIRC; the auto-insurance market and group life insurance market were being troubled by various irregular behavior; some insurers had misled their customers in order to win premiums; and the insurance agent market was still in a chaotic situation, he said.
Both domestic and foreign insurers had been found operating irregularly, he said.
Over the next two months, the industry watchdog will send out inspection teams to check on areas and companies that have had many problems.
"There will be an endless clean-up campaign as long as irregular operations exist in China's insurance market," said Ma.
The CIRC has selected LeBoeuf Lamb, one of the world's largest law firms, headquartered in New York, as its consultant in drafting insurance regulations.
"We have been impressed with the professionalism of CIRC's legal and policy division staff, and look forward to continuing our support and cooperation in their efforts to develop regulations for China's growing insurance market," said LeBoef's Washington-based Partner Everette James.
(China Daily July 17, 2001)
