'Since China's accession to the World Trade Organisation, the hurdles that previously slowed foreign insurers' attempts to gain a foothold in the China market are rapidly diminishing and the outlook is very positive,' he said.

The most significant reform has been the relaxation of restrictions imposed on foreign players.

'For example, foreign insurers are at present unable to offer group life and health products in China. [We are] confident that [the Chinese Insurance Regulatory Commission] will make this possible by the end of next year, in line with WTO agreements,' said Dr Von Canstein.

'Tighter restrictions placed on foreign insurers in contrast to domestic Chinese insurers have in the past proven to be hurdles in the China life insurance market,' he said.

'The opening of the market under World Trade Organisation is, of course, the most significant development for foreign insurers,' he added.

Dr Von Canstein also noted that additional reforms had been set in motion to improve the maturity of the market.

He said the 'gradual introduction of international standards - both in terms of technical and industry ethical standards - by the regulatory authority, the CIRC, and the establishment of an insurance association' had provided the insurance industry with a reliable framework to build on.

The shift in operational focus would also benefit insurance customers in the future, said Dr Von Canstein.

'The CIRC and local companies have shifted their operational focus from the traditionally dominant top-line perspective [comprising the number of agents and premium income] to emphasising the bottom line, including the company's profitability and solvency,' he said.

'Allianz sees this as a very positive step not only for encouraging healthy competition but also for protecting the long-term interests and investments of insurance customers in China.'

Social security reforms sweeping across China are also having a significant impact on the China insurance industry.

'As the government encourages the people of China to take personal responsibility for their old age provision and health care, Allianz is witnessing an increase in the demand for customised insurance protection and wealth creation products,' said Dr Von Canstein.

'There is an immense potential market that all insurers in China are poised to tap into.'

Still Dr Von Canstein believes more can be done to improve competitiveness.

'Foreign insurers would greatly benefit if the authorities were to introduce tax incentives for companies in China to offer corporate pension and health care schemes to their employees via an insurance provider,' he said.

'Insurers could then offer the employees the opportunity to extend their insurance cover to safeguard all aspects of their lives, at a discounted premium.'

This would directly benefit customers through their 'ability to cover all their insurance needs with one provider at discounted rates,' said Dr Von Canstein. Such models are already used extensively in countries like Germany.

Such reforms require closer co-operation between the different ministries.

'The basis for such an initiative is collaboration between the various independent government bodies and ministries, such as the Ministry of Health and the Ministry of Finance,' said Dr Von Canstein.

However, reforms can come at a price. According to China Life's Global Offering prospectus 'some of these changes may result in additional costs or restrictions' on its business.

Such costs have already affected its bottom line.

'Recent changes to determinations of statutory reserves and solvency requirements have affected adversely our income under PRC GAAP [generally accepted accounting principles] and the amount of capital we are required to maintain,' adds the prospectus.

'In addition, because the terms of our products are subject to regulations, changes in regulations may affect our profitability on the policies and contracts we issue.'