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European insurers get access to China 

China has granted licenses to nine European insurance companies that will give them access to its market. The award of the licenses comes as part of a deal struck between the EU and China that removed the Union's final objections to China's membership of the WTO. Whilst the licenses reduce the advantage that US insurers currently enjoy, they are still the dominant foreign players in the Chinese insurance market.

Next steps:

Six of the nine licenses were awarded to European life insurance companies: Italy's Assicurazioni Generali, Britain's CGNU, France's CNP and the Dutch companies ING Group and Aegon Group. The remaining three licenses went to property insurers Allianz AG and Gerling Group from Germany, and Royal & Sun Alliance from the UK.

Whilst the licenses have now been awarded, it will take at least six months before they are formally approved and the insurers can begin setting up their operations.

China's membership of the WTO is scheduled to be formally approved by members at the fourth WTO ministerial meeting in Doha, Qatar in November. Ratification procedures should be completed by early in 2002 after which China would be a full member.

Once China is a full WTO member, it has stated that it will award licenses to foreign insurers on the basis of 'prudential criteria.' The geographical limitation criteria that currently apply will be removed within three years.

The issue of AIG's sole ownership of four life insurance companies will probably have to be settled by WTO arbitration once China is a full member.

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