New rules to regulate and promote the development of life insurance in rural areas are to be released by China's insurance watchdog.

"The rules will probably be made public at the end of this month or early October," Gong Yisheng, director of the system department of the China Insurance Regulatory Commission (CIRC), told China Daily yesterday.

Gong disclosed that the threshold for insurers' entry into rural areas will be even higher than for cities due to the fragility of the rural market. For instance the insurer should have outlets in local markets to ensure proper services for rural residents. And they'll not be allowed to depart the rural market at will. "All these measures aim to maintain a good environment for insurance development in rural areas," Gong explained.

With the 'word of mouth' phenomenon particularly powerful in rural areas misleading sales or unreasonable refusal of claims will result in mass reimbursement demands thus damaging the local insurance market, he said.

At the moment accident and health insurance are the best sellers in the countryside but products tailored to farmers are in short supply.

"Comparatively high premiums, inflexible payment terms and incomprehensible policy clauses are the major problems," said Zhou Fuping, a researcher with the CIRC adding that most insurers made little or no changes to their rural area policies.

"To give farmers more choice insurers are encouraged to offer more affordable policies and easy to understand clauses when entering the rural market," said Gong. "We'll soon embark on a pilot program that differentiates premiums in different regions."

The life insurance industry in China's countryside has developed rapidly in recent years. There are around 14,000 outlets in rural areas which cover 30 percent of towns and villages. For example China Life, the country's largest life insurer, has 427,000 sales agents in counties and secured 12.9 billion yuan (US$1.6 billion) of premiums from countryside customers in the first half of this year.

When developing the rural market insurers are also paying attention to migrant workers. Statistics show that China has some 120 million such workers which accounts for one-tenth of the total population. To better protect their livelihoods local governments have played an active role in helping them get insured.

In Shanghai insurers, entrusted by the Shanghai municipal government, offer comprehensive insurance to migrant workers. By the end of 2005 about 2.5 million of these workers had been insured with claims topping 200 million yuan (US$25 million). Furthermore some insurers, such as New China Life, offer services that enable migrant workers to get timely reimbursement in the city even if they buy the policy in their hometowns.

"We'll strive to popularize this service in Beijing, Shanghai, Guangdong and Shenzhen -- the major destinations for migrant workers," said Gong. "In major labor exporting provinces such as Shandong, Sichuan, Hunan and Anhui we'd like to offer more affordable insurance products with financial support from the local government."

(China Daily September 7, 2006)