杨依文 Yvonne S. Yuchengco / President, Malayan Insurance Co., Inc., Philippines
    
    
    1. HOW WTO ACCESSION BENEFTIS CHINESE NATIONAL INSURANCE INDUSTRY
    
    China's successful accession into the World Trade Organization (WTO) on December 11, 2001 has ushered in an unparalleled opportunity for Chinese insurance Industry. Whilst China's national insurance companies would face intensive challenges of exploring the huge potential insurance market in competition with the global counterparts, they at the same time could have much easier access to the world class expertise in customer services, innovative product development, financial management, quality improvement and measurement, capital operations and a lot of others. Moreover, rules and principles of the WTO which China has committed to follow, would definitely bring positive changes to the competitive market environment in the industry by requiring and encouraging China to liberalize and deregulate the market. In light of these changes, Chinese national insurance companies would be able to:
    
    . Enjoy an efficient and fair-play market environment with the lifting of tax rate discrimination and limitations on operating regions, products and reinsurance;
    
    . Adopt a more innovative approach to distribution channels, product development and capital operations;
    
    . Facilitate the provision of integrated financial services;
    
    . Position well in the niche market by fragmenting the current highly concentrated insurance market.
    
    With the elimination of unfair elements in market competition, Chinese insurance companies could have much stable market expectations and reasonable market behaviors, which would in turn help them to achieve their goals of becoming a company they are seeking to be.
    
    For the Chinese national insurance industry to achieve a sustained and healthy development, opportunities heralded by the WTO accession have constituted an important external environment. But there are definitely more than that. For the management team of the Chinese insurance companies, more severe challenges come from the issue of how to improve their own competitiveness after the WTO accession.
    
    2. HOW TO IMPROVE COMPETITIVENSS OF CHINESE NATIONAL INSURANCE INDUSTRY
    
    From our understanding of the Chinese national insurance companies as well as our profound experience of running the biggest insurance company in the Philippines, also being an Asian country, we would like to share with you the following suggestions.
    
    2.1 BEING MARKET ORIENTED
    
    We understand that there are currently thirteen(13) national insurance companies in China. Among them, four(4) are state-owned and nine(9) are shareholding companies.
    
    For the state-owned companies, which are solely controlled by the state, It is very important for them to:
    
    . Have in place an independent operational mechanism and risk capacity;
    
    . Avoid seeking short-term achievements during the management team's tenure of office for the purpose of promotion whilst they are appointed by the state institutions;
    
    . Visualize in mind the long-term development of the company in making decisions;
    
    . Seek to reengineer the current structure towards a modern corporate system in compliance with the needs of market competition rather than state instructions;
    
    . Orient the corporate operational structure to the healthy and sustained growth of the company in a long run;
    
    . Have a rigid training program for the agents;
    
    . Computerize the processes;
    
    . Hire insurance professionals-set up school for training subsidized by government.
    
    Although the shareholding companies in China were supposed to have a market orientation in their operations and development, there is still a long way to go for them to really well position themselves in the market competition. Since most of the shareholders did not have much experience of managing an insurance company before they made such investment, they may have more or less discrepancies over daily decision-making and long-term development of the company. Being market oriented, both the shareholders and management should have concerted understanding of company visions and missions, insurance operations and development strategies.
    
    2.2 BEING PROFIT DRIVEN
    
    At primary stage of competition in the insurance industry, there always exists unreasonable quest of market share by cutting premium rates and taking business without risk management considerations. We understand, in the Chinese insurance market, because of the homogeneity of most insurance products and tight regulation of premium rates, unauthorized rate cutting has become common measure for the national insurance companies to fight for business and market share. Although premium rate cutting is unavoidable in a soft market, underwriting without risk management could be very hazardous to an insurer.
    
    Sacrificing profit to business expansion is not more than suicidal to a market-oriented company. Size does matter, but profit is the fundamental element for sustainable development of the company. To secure long-term competitiveness in the market, profit driven operation should become one of the key strategies of the company.
    
    To do this, the insurance company should set up fully operating risk management mechanism and underwriting procedures to ensure that the written business is profitable to the company. On the other hand, in parallel with professional capital operation, the company should also strengthen its budget management and cost control.
    
    2.3 EXCEEDING CUSTOMER EXPECTATION
    
    It would never be over exaggerated to stress the importance of customer service in the insurance industry. Since Chinese national insurance industry is still highly regulated, the insurance companies could have little freedom to decide on what products they can sell and how much they can charge for the products they sell. Under such market situation, one critical element that can distinctively differentiate one company from another is the quality of customer service. For foreign insurance companies, either having licenses in China or still working on license, service is also the first priority and one of the best weapons for them to battle in the competitive market.
    
    Good customer service is determined by customer orientation, process improvement and employee involvement. It starts from identifying the right customer for the insurance company in its niche market, grows in the process of improvement and blossoms while every employee gets involved. For Chinese national insurance industry, the companies should do more than providing services to the needs of the customers, or to the satisfaction of the customers. They should do all their best to exceed customer expectation and satisfaction. We believe it is especially effective to win customers in the civilized country of China.
    
    Chinese companies should also make use of the latest technology and management tools to back up efficient customer service. A Call Center can provide round-the-clock accessible services to the customers through computerized service system, and CRM (Customer Relationship Management) can help to achieve gapless integration of the company's business data, customer data and other resources, and deliver value-added service beyond customer satisfaction.
    
    At Malayan, we from time to time conduct Customer Satisfaction Surveys to find out what our customers' expectations are and how we can improve our service to not only satisfy but also 'delight' our customers. We have also adopted training programs for employees at all levels, especially the front-liners or those who deal directly with customers. These programs are designed to instill in our employees the value of customer service, help them understand the needs of customers, and develop an attitude of delivering first class service beyond customer expectation.
    
    2.4 INNOVATING PRODUCTS AND DISTRIBUTION
    
    There is a trend in the Asian countries to liberalize and deregulate the insurance market. We understand China is doing the same thing. Premium rates of motor insurance are liberalized in Shenzhen on an experimental basis, and further deregulation on insurance rates and clauses are said to be extended to the other product lines and nationwide market. Under such circumstance, the national companies should take this opportunity to accelerate product innovation and channel diversification so as to differentiate from their competitors.
    
    China is going through extensive reforms and restructuring in various areas, especially in the state-owned industries. As insurance protection providers, Chinese national insurance companies will continue to add their own values in the national economic chain by innovating their insurance products to meet the needs of development.
    
    Deregulation also offers to the national insurance companies opportunities to diversity their distribution channels. Other than traditional agency network and direct sales force, the national companies can make full use of their good relationship with banks, trade societies and residence communities to sell their innovative products.
    
    In parallel with innovations of products and distribution, the Chinese national insurance companies can also bring in the latest management tools to enhance product and distribution management. For instance, the companies can use ERP to integrate resources in market research, product development and customer service, use SCM (Supply Chain Management) and BPR to strengthen distribution channels and business process.
    
    2.5 TRAGETING NICHE MARKET
    
    After the WTO accession and continuous entry of foreign players, the Chinese insurance market will become less concentrated. In the gradually fragmented market, apart from differentiation by innovative products and distribution, Chinese national insurance companies should find out their niche market in which they have core competency. This will help the company to maintain its competitiveness in a long run.
    
    2.6 SEEKING OPPORTUNITIES OVERSEAS
    
    The WTO accession will accelerate the globalization of Chinese national insurance companies, and encourage them to seek opportunities in the overseas market. By competing with foreign companies in the global arena, Chinese national companies will bring in international capital and underwriting know-how, which will in turn help to reshape their competitiveness on a much broader stage.
    
    3. CONCLUSION
    
    In conclusion, to improve competitiveness of Chinese national insurance industry, the insurance companies should be more market oriented and profit driven in their operations and management, and commit to provide value-added and technology-backed-up service to beyond the customers' expectations.
    
    In a more and more deregulated market, the Chinese national insurance companies should innovate their products and distribution channels so as to meet the very needs of their customers under a broader environment of Chinese economic reforms and development.
    
    In the domestic market, Chinese national insurance companies should build up their core competency and target their niche market in a competitive way; and in the global market, they should seek opportunities to reshape their competitiveness worldwide.