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To open Insurance Market Isn't Tantamount to " Inviting Wolf into a House"
Regarding the problem of opening up insurance market, foreign insurance companies should not be regarded as wolves nor should the opening up of insurance market be taken as "inviting wolves into houses".
First, judging the role of opening up insurance market, the move is beneficial to fostering China's insurance market and industry. After more than ten years of robust development, the growth momentum of Chinese insurance industry is gradually slowing down. There are many blamable causes for this decline in growth. A key point is that the old-fashioned idea, backward business style, insufficient intermediary institutions and imperfect managerial system have rendered Chinese insurance market unhealthy and immature, thus putting hindrance on the fast development of insurance industry. Today, when faced with an increasing globalization of economy, to strengthen the opening up of insurance market is beneficiary not only to the integration of China's insurance managerial system with international practices and the improvement of market structure but also to the changes of ideas, improvement of service and strengthening itself in the course of competition so as to bring about a healthy development of domestic insurance industry.
Secondly, foreign insurance companies are not powerful enough and invincible. At present, among 30 insurance companies, foreign-funded ones and joint ventures numbered over 10, while domestic ones have been developing in the course of competition with their foreign counterparts. In 1992, when American International Assurance Company entered Shanghai market for the first time its market share was 20%, and the shares of domestic companies soon overtook it, outstripping 90%. Compared to foreign companies, domestic ones have obvious advantages on familiarity with the market, coverage characteristics, and marketing network. The survey by US Nilsson Market investigation Co. in four cities including Shanghai and Guangzhou shows that in the eyes of numerous consumers, in spite of the obvious advantages of the foreign companies in funds, technology and management, the high product prices and the unavailability of governmental guarantee have made most of consumers to choose domestic ones when deciding on purchase. So, the entry of foreign-funded insurance companies is by no means terrible at all. For domestic companies, what is important is to turn pressure into impetus and improve service by bringing their own advantages into full play.
Thirdly, opening up is a necessary requirement for Chinese insurance industry. The development of Modern insurance industry requires an increasingly closer link of insurance industries. Some risks with high technology and high rate of loss need the assistance or direct undertaking by powerful foreign insurance corporations. Simultaneously, domestic insurance industry need to learn advanced managerial technologies and experience from foreign companies. The opening up of the industry is also an objective need of social and economic reform in China.
The competition brought about by opening up of insurance market is not only a competition between Chinese-funded and foreign-funded ones, it is also a competition between domestic companies and between foreign companies as well. Furthermore, the competition doesn't simply mean annexation. It also means cooperation in competition and competition in cooperation, thus to achieve the goal of common development, not as simple as to drive opponents out of market.
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