Life insurer seeks to peddle policies in China

Cathay Life Insurance (國泰人壽) said yesterday that Chinese authorities may approve the company's application to set up an office in Beijing before the end of this month.

The life insurance firm is expected to become the first Taiwanese financial institution to directly open an office on the mainland -- a move which may kick-start a new wave of mainland-bound migration among Taiwanese financial institutions.

"The Chinese market is going to be the main focus of all life insurance companies in this century," Mei Ju-piaw (梅汝標), the head of the company's China operations, told the Taipei Times yesterday.

The company, which controls half of Taiwan's life insurance market, is optimistic as it believes that Chinese citizens will soon start buying life insurance policies as their incomes grow in tandem with the economy.

Analysts the market for insurance policies in Taiwan has become saturated, forcing local firms to look to China as the next area of growth.

Their counterparts are also complaining about missed opportunities. Jeffrey Koo (辜濂松), chairman of Chinatrust Bank, hinted during a speech on Wednesday that the government should consider relaxing the ban on Taiwanese banks operating in China.

As local banks remain mired under government controls, international banks are now "making all the money" by serving Taiwanese investors in China, he told a group of students at Tamkang University (淡江大學).

According to Chinese regulations, foreign investors must wait two years after setting up a representative office before they start doing business in China, although the regulations may differ for Taiwan-owned companies.

Analysts Taiwanese insurance companies -- due to language and the culture similarities -- may have an edge over other international insurers in the Chinese market. Insurance companies usually rely on local sales representatives to sell insurance policies.

Cathay Life, which reported total sales of NT$934 billion in 1999, has an army of 24,000 sales agents in Taiwan. "We believe China's entry into the WTO is a major attraction for us," Mei said.

But the Chinese government may prefer allowing Taiwanese banks in before insurance companies because banks bring in money, while insurers take it away.

Another local insurance firm, Fubon Insurance, in which Citicorp has recently bought a 15 percent stake, is also considering setting up a representative office in China, though it is not yet known when.

Citicorp to use Fubon Insurance as an avenue to develop the markets in the Asia Pacific region, particularly the life insurance market, says a head of research at a domestic securities house. "Given the low penetration rate, life insurance will become quite popular in China," he said.