China's Insurance Law should be amended to get in line with international practices and adapted to the new conditions after China becomes a full member of the World Trade Organization (WTO), said He Jingzhi, deputy to the Ninth National People's Congress (NPC), the top legislature of the country.
The NPC deputy, who is president of China Life Insurance Company Shanghai Branch, said as one of the first domestic industries to be opened to foreign capital, the insurance sector will face tough challenges arising from China's WTO entry, and a good law is badly needed to regulate the market order in line with WTO rules.
She said that some stipulations in the Insurance Law adopted in 1995 obviously differ from international practice. These include the supervision mode, investment channels and the interpretation of some professional terms.
The existing stipulations on specific insurance businesses are restrictive to domestic companies' development of insurance products and competitiveness, leaving them in a poor position in international competition.
In addition, some stipulations restricting the use of capital hamper the development of insurance companies as well. Insurance companies should be allowed to invest through more channels for profits, which is also an international practice.
She said that opening to foreign capital has been a strong driving force behind the development of China's insurance industry. In the 10 years before 1989, the annual growth rate of Shanghai's insurance premium was 28 percent; the figure rose to 82 percent in 1992 when Shanghai was opened to foreign insurance institutions.
"China's entry into the WTO is a great opportunity for domestic insurance companies," she said, "but that opportunity can be seized only when we have a good insurance law that both conforms to WTO requirements and provides adequate room for the development of domestic insurance companies."
March 5, 2002
Source: People's Daily
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