U.S. Insurers Press China for Access
BEIJING — American life insurance companies are pressing China to make good on WTO commitments to give them equal access to its booming market, arguing that they can help meet the needs of a fast-aging population, the head of an industry group said Tuesday.
Insurers want Beijing to remove obstacles that limit their ability to set up nationwide operations and cap foreign ownership of a Chinese insurer at 50 percent, said Frank Keating, president of the American Council of Life Insurers.
He said China’s life insurance market, now about one-tenth the size of the $540 billion-a-year U.S. market, could grow in coming years to become the world’s biggest.
Keating said his group pressed regulators in meetings this week to bring China’s licensing system in line with its promise to the World Trade Organization to treat foreign and Chinese insurers equally.
China’s current system requires foreign insurers to apply to open new offices one at a time, while Chinese competitors can win permission for a nationwide operation, Keating said.
China promised in 2004 to end such geographic restrictions and officials acknowledge that they are no longer required by regulations, but regulators still use the old system, he said.
“Our message here was a gentle chiding message that as this process goes forward it is important to be prompt, to be fair and to provide a competitive market for all,” Keating told reporters.
China faces a Dec. 11 deadline for meeting commitments to open its banking, insurance and other financial industries to foreign competitors.
Trade groups say Beijing has met most of its commitments to repeal formal barriers to foreign competition. But they say that in some areas, companies are still waiting for promised regulations that are meant to put them on an equal footing with Chinese competitors.
Keating said he told Chinese officials that foreign insurers can help Beijing cope with the needs of a rapidly graying population by selling life insurance, annuities and other retirement-related services to millions of families who can afford them.
That would let government focus on helping the poor, he said.
Keating, a former governor of the U.S. state of Oklahoma, said he plans to meet with U.S. Treasury Secretary Henry Paulson in hopes of having equal treatment in insurance made part of a U.S.-Chinese dialogue on economic matters.
The dialogue was launched last week when Paulson visited Beijing.
Keating also said that while Beijing has met its WTO commitment to let foreign investors own up to 50 percent of a Chinese insurer, his group wants to see that limit raised to allow full ownership.
The American Council of Life Insurers represents 377 companies that sell life insurance, annuities and pensions, including about 20 that operate in China.
U.S. insurers accounted for $1.5 billion of the $61.6 billion in life insurance premiums paid in China last year, according to Brad Smith, the insurance group’s vice president for international relations.
The Chinese market for insurance has been growing by 15 percent to 20 percent a year over the past decade, Smith said.
Smith said he couldn’t estimate what share of China’s insurance market foreign companies might be able to capture. But elsewhere in Asia, foreign companies account for 25 percent of Japan’s insurance market and 13 percent of South Korea’s, he said.
Insurers hope to see Beijing create tax and other incentives for families to invest in annuities, long-term health care policies and other retirement services, Keating said.
“That will free the government to focus on the 60 million poorest people,” he said. “That’s good public policy.”