Insurers: Press China For Less Restrictions

"We sense they may be backtracking. We're very concerned. They can't change the rules of the game," said John Savercool, AIA vice president, federal affairs.

While he was critical of Chinese regulation, Mr. Savercool commended the fact that last month a delegation from the China Insurance Commission and the National Association of Insurance Commissioners signed a memo of understanding, which will see the U.S. providing technical expertise.

"We hope it results in more reasonable competitive regulation to make the market more open," he said.

Both organizations, which represent the majority of the life and property-casualty insurance companies in the United States, asked U.S. Trade Representative officials to raise insurance issues with the Chinese at this week's World Trade Organization's Council on Trade In Services meeting in Geneva, Switzerland.

The groups said the United States had raised the point at the committee's last meeting in March, and the move was supported by the European Union, Switzerland, Japan, and Canada.

"The U.S. insurance industry strongly supported China's admission to WTO because it made strong commitments to liberalizing insurance regulation. Our goal now is to ensure that it fully abides by these commitments through its regulatory process," said John Savercool, AIA vice president, federal affairs.

"Although the implementation process is just beginning, U.S. negotiators and the Congress need to keep the pressure on Chinese authorities so that U.S. companies can finally gain meaningful access in China," said Brad Smith, ACLI managing director, international relations.

On Wednesday, Smith and Savercool wrote the Congressional-Executive Commission on China, which held a hearing about China's WTO compliance today, and urged the panel to support the USTR in any effort to make sure China fully complies with its agreements.

The commission was established by Congress when it passed legislation granting Permanent Normal Trade Relations to China last year as a way to allow Congress to monitor China's compliance with its WTO commitments.

"Any of these measures that China implements that fall short of its WTO commitments would effectively deny U.S. insurance companies meaningful access in China, access we thought would be granted by China's WTO accession," the letter says.

The current Chinese insurance regulations for foreign-based insurers appear flawed, according to ACLI and AIA, because:

? They are open-ended, permitting too much bureaucratic discretion that could lead to violations of WTO commitments.

? The capitalization requirements are unnecessarily burdensome, requiring deposits of more than 100 times what is usually required in the United States.

? They deny current and future non-life insurers the ability to branch and then sub-branch into the rest of China, a clear violation of negotiated trade agreements.

? They require insurers to go through numerous bureaucratic processes, despite a commitment to a one-stop licensing arrangement.

Since December, ACLI and the AIA have worked closely with USTR, and the Department of Commerce to address these issues with the China Insurance Regulatory Commission and the Chinese Embassy, but the disputes remain unresolved.