A Strategy for Opening China's Insurance Industry
Section III: Strategy Papers

Domestic Public Relations Strategy

Objective: 

The objective of the public relations strategy is to build support for liberalization of the Chinese insurance market. To obtain this objective, a coalition should be established that includes as many interest groups as possible—the more people or interest groups involved in the coalition, the more powerful it will be. Additionally, a coordinated government system should be established in order to enforce the policy.

A.     Coalition Building Strategy 

The following interest groups should be targeted for the coalition: 

Industries:

Nearly all Chinese industries have a stake in the issue of opening up the insurance industry. However CIRC should focus its efforts on banking, securities, and other financial services companies. It will also want to give special attention to industries that are likely to adopt pension and/or health insurance reforms in the near future. 

Domestic consumers:

Domestic consumers will benefit from insurance market liberalizations and should be targeted for the coalition. Specific groups include: 

• Individual life and non-life insurance buyers (people who work at private or foreign companies)

• Employees of state-owned enterprises

• Rural populations

Obviously, consumers from different social classes, age levels, and work environments will have different attitudes towards the issue of insurance reforms. The CIRC will need to adjust its approach for each of these different interest groups.

Media outlets:

Media resources will provide the most effective means for educating the public on insurance sector reforms and insurance purchasing options more generally. It will be crucial for CIRC to cultivate good relationships will all major media groups, including:

• CCTV (the national TV station)

• Local TV stations

• People’s Daily34

• China Daily35

• Local newspapers

• "Insurance Journal"

• Internet

Academics:

Academic groups are just beginning to get involved in research on the insurance industry, and this research will be important to CIRC as it reforms China’s insurance sector. Accordinlgy, CIRC should consider these groups' interests and design a proposal to achieve general support for reforms from them. The main academic target groups are: 

• Insurance research centers

• Universities

B.     Coordination Between Government Agencies 

Since opening up the insurance sector is part of China’s overall economic reform, it is absolutely critical to gain as much support as possible in government agencies, including MOFTEC, the NPC, the State Council, the Ministry of Labor, and the Ministry of Health. CIRC should call for the establishment of a coordinated program among agencies that will enable it to work efficiently with these agencies. 

In the short run, CIRC should propose that the State Council call for strengthening cooperation among government agencies to implement the new insurance policy; only the State Council has the power to bring all agencies together and insist upon their support for CIRC. 

In the long run, CIRC should pursue stable relations with other government agencies by establishing working groups that will study the effects of liberalization policies and make recommendations to the State Council. Members of the groups should come from  CIRC, MOFTEC, the Ministry of Labor and the Ministry of Health.  

• The working groups’ activities might include:

• Holding news conferences.

• Conducting market research and investigations.

• Settling disputes among different government agencies.

• Submitting annual reports to the State Council.

C.     Building Support from Domestic Insurance Groups 

New insurance sector policies will not succeed without support from the domestic industry. Domestic insurance companies claim that they are still young and need some protection. Accordingly, they are likely to oppose liberalization policies. To help gain their support for reforms, CIRC should:

• Emphasize that allowing more foreign participation will benefit the domestic industry.

• Develop policy and legal frameworks to assist the development of domestic companies.

• Encourage the establishment of linkages between domestic and foreign companies.

Summary of key recommendations:   

• Build a coalition in order to get more support for opening up the Chinese insurance market.

• Establish a working party in order to strengthen cooperation among government agencies.

• Build support from the domestic insurance industry.

A strategy for opening up China’s insurance market
Section III: Strategy papers 

Legislative Strategy

The legislative strategy will focus on targeting local and national government agencies to form greater support for reforms.

Objectives:

• Convince the central government that liberalization should be based on CIRC's  recommendations.

• Convince the central government to issue policy statements nationally.

• Convince the NPC to pass new insurance regulations and laws.

• Establish a long-term enforcement mechanism.

The legislative strategy includes both short-term and long-term strategies: 

A. Short-Term Strategy 

The short-term strategy will be focused on achieving changes in the insurance law. CIRC can take following actions:           

Consensus building

The 16^th meeting of 9^th NPC Standing Committee will be held later this year. CIRC’s primary goal for this meeting should be to convince the NPC and State Council to put the issue of insurance industry liberalization on the agenda. The coalition, especially domestic consumers, interested industries and academics, should do the following:

• Press the State Council to engage in a dialogue with the coalition.

• Support the current social welfare reforms.

• Press the NPC Standing Committee and Law Committee to seriously consider the insurance liberalization issue, including implementation issues (see exhibit 12, sample letter to NPC Law Committee member).

• Introduce CIRC’s policy recommendations to the NPC and State Council.

• Offer testimony before the NPC.

• Provide a set of informational documents.

The documents can include:

• A white paper (see exhibit 13 for sample white paper)

• Case studies done by CIRC and other insurance research centers (including this project)

• Documents that include all data and policy recommendations

• Sample newsletters (see exhibit 14)

High-level meetings

CIRC should organize high-level government meetings to gain support from other government agencies and urge them to cooperate in CIRC’s efforts to liberalize the insurance industry. The target government agencies include:

• MOFTEC

• Ministry of Labor

• Ministry of Health

• Central Bank

• State Council

Local NPC representatives

Local NPC representatives will need to be convinced to vote for insurance liberalizations. Because representatives from southern China will be more receptive, CIRC should target them first.

B. Long-Term Strategy 

The long-term strategy focuses on establishing a stable legal enforcement mechanism. CIRC should submit draft regulations for foreign insurance firms and submit them to the State Council for approval this year. Additional steps that should be taken include: 

• Establishing a working group (see public relations strategy).

• Persuading the State Council to pass regulations to enforce new policies.

• Convincing government agencies to cooperate with the State Council and CIRC.

Summary of key recommendations:    

• The short-term strategy focuses on changing the Insurance Law.

• The long-term strategy focuses on pursuing a stable legal enforcement mechanism.

Media Strategy

Using the media will be extremely important for CIRC and its coalition. Media sources offer a powerful means of addressing the public and disseminating information on policy issues. In the past, Chinese government agencies have seldom used this tool. CIRC should use all available media tools in order to create greater visibility of the insurance issue.
   

Objective:

The primary goal in using the media is to generate greater public support for reforms and the goals of the legislative strategy. The secondary objective in using the media is to educate Chinese insurance consumers about insurance.

Target audiences:

·    Government agencies and the central government. Media publicity will help gain the attention of decision-makers in these agencies. CIRC will only achieve its legislative goals if such decision-makers focus adequate attention on the insurance issue.

·    Domestic consumers. Chinese consumers do not have enough knowledge about insurance. The media will play an important role in educating consumers and gaining public support for legislative changes.  

Main Focus:

The media strategy will focus on:

·    The positive changes that will come with insurance market liberalizations.

·    The strategic importance of opening up China’s insurance market.

·    The positive impact on domestic insurance buyers of opening the insurance market.

Actions:

The media strategy will involve the following: 

1^st Level: Introduce the issue and get more public attention 

·    A press conference should be held to address current policy concerns and possible future changes. (The conference can be held in August 2000.)

·    A press release should be issued after the conference.

·    Case studies and academic papers should be published and their results should be sent to the media.

·    CIRC officials should make television announcements.

2^nd Level: Initiate a public debate 

·    Initiate TV debates with interest groups, such as domestic insurance companies and consumers.

·    Initiate TV programs and interviews with experts on insurance.

·    Initiate a debate between influential experts who are for and against liberalizations.

·    Publish a CIRC/coalition newsletter to inform interest groups and industry associations on reform progress.

·    Issue internal policy reports and submit them to the State Council in order to keep the Council informed of CIRC’s activities.

3^rd Level: Public education 

Due to the fact that a majority of Chinese citizens still lack insurance awareness and knowledge, CIRC should develop a long-term media strategy that focuses on educating the public and preparing for policy implementation. CIRC should:

·    Initiate TV education programs featuring insurance experts.

·    Invite foreign insurers to participate in the TV education programs.

·    Strengthen current education programs currently offered in cooperation with foreign companies.

·    Expand insurance research programs.

·    Help local insurance associations establish insurance education programs.

·    Work with foreign insurance companies to publish articles on insurance policies and business.

Special recommendation: 

A statistical report made public by the China Internet Information Center on January 8^th this year shows that, by the end of 1999, the number of Chinese subscribers to the Internet had reached 8.9 million and the number of computers in China linked with the Internet had reached 3.5 million. The numbers show that the Internet will be an effective media tool in China, and CIRC should take advantage of it. 

CIRC should also consider launching its own web site. The site should have both English and Chinese versions. It should explain insurance policies and regulations to the public and allow a direct line of feedback from the public. The site also can answer frequently asked questions about insurance and insurance policy. 

The main contents of this web site can include:

·        A description of CIRC

·        News from CIRC

·        News from the world insurance industry

·        Laws and regulations

·        Information on foreign insurance companies

·        Information on China’s insurance market

·        Statistical reports

·        Questions and answers concerning the liberalization of the Chinese insurance market.

Currently, there are several Chinese insurance web sites that CIRC should provide links to. These are

http://www.china-insurance.com/
http://gulili.163.net/
http://www.zg169.net/~fengzh/ 
http://serve.cei.gov.cn/sd/index.html

Summary of key recommendations:  

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