Leading US insurer sets up joint venture in Beijing

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Last updated at: (Beijing Time) Friday, March 26, 2004

Leading US insurer sets up joint venture in Beijing

The New York-based Metropolitan Life Insurance (Metlife) announced here Thursday the establishment of a joint venture in the Chinese capital in collaboration with an airport management company.

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The New York-based Metropolitan Life Insurance (Metlife) announced here Thursday the establishment of a joint venture in the Chinese capital in collaboration with an airport management company.

Metlife and Beijing Capital Airport Group Company (BCAC) will have half-and-half ownership of China U.S. Metlife.

However, the new establishment added to the concerns of other industry players as the two showed their intention to dominate the air passenger accident insurance market.

On March 5, BCAC submitted an application to the Association of Beijing Insurance (SBI) asking for a halt to the selling of accident insurance to air passengers, a policy jointly operated by19 insurance companies. Instead, it wanted passengers to buy a policy from China U.S. Metlife at the airport.

The move immediately incurred condemnation from the other 19 companies, which sharply accused the airport company of "monopolizing the market."

"I cannot accept the request," said Wang Kaiyu, SBI's secretary-general, noting that if the application was approved, BCAC, which has already had 40 percent of the Beijing market, and its new joint venture would dominate the insurance market.

The passengers have the right to make their choices and this lawful right must be treated with respect, Wang said.

Facing criticism, BCAC and its American partner remained silent for nearly three weeks until BCAC's general manager Li Peiying broke the calm on Thursday.

Li said that though the result is yet to come out, the issue will be resolved. Even if China U.S. Metlife wins permission, it does not mean the company will dominate the market, and the question now is what kind of insurance company will enter the field and how, he added.

BCAC is close to the market but it is not its owner, and consumers will choose the company that can provide the best service, he said.

Currently, the market in Beijing is operated by 19 companies, which share the risks and benefits under the direction of SBI.

Each policy of this kind sells for 20 yuan (2.4 U.S. dollars) and the maximum compensation for each policy is 20,0000 yuan (24,100 U.S. dollars).

According to China's commitments to the World Trade Organization, restrictions on foreign-funded insurance companies will end this year. Beijing is considered a place of great potential for overseas insurance companies though it opened its insurance market later than the other two major cities of Shanghai and Guangzhou.

Beijing reported 23.3 billion yuan (2.8 billion U.S. dollars) in life insurance premium in 2003, up 67 percent from the previous year.

Source:Xinhua

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