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Christine Chan

WTO promises allow insurer to offer a broader range of products to Chinese customers seeking non-life coverage

American International Underwriters (AIU) expects its mainland income to climb by as much as 50 per cent annually as it begins to insure a broader range of Chinese customers  from next month.

Mainland revenue was projected to reach 500 million yuan (HK$464.5 million) by November next year, up from an estimated  330 million yuan this year, said AIU Greater China president Ross Matthews.

At present,  the property and casualty arm of American International Group is allowed to insure only foreign customers on the mainland and in certain cases Chinese companies, such as H-share firms and 'large commercial risks' at firms such as power plants.

'The biggest change for us  is that we will be able to write domestic business from this December, enabling us to work at earning the business of domestic Chinese companies,' Mr Matthews said.

'Business growth will be no less than 50 per cent every year from now. We consider this to be a very strong number.'

As with other foreign, non-life insurers, AIU will be given broader access to the mainland   from next month as dictated by the commitments China took when it joined  the World Trade Organisation.

AIU  has four branches in the mainland and  most of its income comes from foreign customers.

Mr Matthews said AIU wanted to extend its reach to include domestic Chinese companies and cover marine cargo and related liability insurance, management liability and accidental and supplemental health (A&H) insurance.

He said domestic exporters could take advantage of AIU's global network and make claims for transport and product-liability risks which occur offshore.

AIU insured about half  of the 70 or so H-share companies for management liability in addition to some New York-listed Chinese companies, Mr Matthews said, without revealing details.

'More and more domestic companies that list on foreign stock exchanges will have more exposure to directors' lawsuits,' he said. 'Domestic insurance companies don't have the expertise to do this. It's really a very developed type of liability that starts in the West, where you have a lot more shareholder rights.'

Similar coverage would be provided to domestically listed companies from next month, he said.

AIU plans to double its staff count to 1,000 and expand its reach to 15 provinces by 2005.

'We plan to open branches at a strong pace but not everywhere,' Mr Matthews said. 'Our focus is really on areas for us to make good business, rather than putting dots all over the map.'

Mr Matthews said this excluded motor insurance because it was a money loser  in China. But thanks to a liberalising market, foreign firms were permitted to offer A&H insurance, which should become 'a very large market, growing faster than the traditional market'.

In China, 'a lot of people like to go to private doctors for  medical treatment' in addition to using national healthcare, he said. 'The A&H market in China is not very big at present, probably about 4 per cent of what life companies write  in terms of products, but it is one of the fastest-growing segments.'

There were millions of new A&H policies written by domestic companies almost every month, while PICC Property and Casualty sold policies worth one billion yuan in premiums between March and June this year, he said.

BREAKING COVER

Mainland revenue expected to reach 500m yuan by next year

AIU wants to cover marine cargo, management liability and A&H

Staff will be increased to 1,000 covering 15 provinces by 2005



AIU sees 50pc annual surge in China