But the sector, plagued by poor regulation, a limited range of policies and tight investment curbs, would benefit from an opening in the long run as foreign insurers would bring new technology and management, state media and analysts said. "From a short-term point of view, China's fledgling insurance industry will be shuddered by WTO entry," the Financial News said on Thursday.

"It stands to lose part of its premiums and talented workers" to foreign insurers, which had absolute advantages in insurance policy design, marketing skills and funds, it said. Chinese insurers have grown rapidly in the past 20 years and control more than 90 per cent of the country's insurance premiums, which totalled 124.73 billion yuan ($15 billion) last year.

But the penetration rate for commercial insurance in China remains extremely low, ahuge temptation to foreign insurers. Only about a dozen foreign insurers operate in China and they are limited to the cities of Shanghai and Guangzhou and most are restricted to a 50 per cent stake in joint ventures.

China issued its first foreign insurance licence in 1992. The 12 firms it subsequently allowed in have been granted access according to a rationing policy that gives the prized licences to trading partners when Beijing wants favours. About 113 foreign firms are in the queue to get in.

China, as a big concession to join the WTO, would lift geographical curbs on foreign insurers within five years of WTO entry, according to officials in Washington, which has promised to wrap up a deal to get China into the WTO by the end of 1999.

Foreign ownership of life insurance firms could rise to 51 per cent after one year. Non-life and reinsurance firms could form wholly-owned subsidiaries in two years, they said. "If the WTO agreement is reached and the market begins to open up, there is going to be animmediate need for some of the changes to occur very quickly," said Kevin D Young of Price Waterhouse Coopers in Beijing.

"If they don't meet the demand, then you are going to see some loss of market share potentially," Young told Reuters on the sidelines of the World Economic Forum in Beijing this week. Big changes are taking place in China's insurance industry.

Last year, Beijing set up the China Insurance Regulatory Commission (CIRC) after a price war dealt huge losses to insurance firms. China did not have an insurance law until 1995 and still lacks related rules.

On Thursday, CIRC chairman Ma Yongwei was quoted by state newspapers as saying China would enact detailed rules "before long" to govern the opening of the insurance market.

To foster competition, China has disbanded the giant People's Insurance Company of China by splitting it into three independent insurers in life, property and reinsurance. Smaller ones like the Ping'an Insurance Co and Pacific Insurance Co would also be restructuredthis year to separate their different insurance businesses, Feng said.

"Opening is not formidable," said the Financial News, which is run by the central bank. "On the contrary, it can enhance our competitiveness and business standards." But more changes are necessary, analysts say.

"It needs to be a lot more work done with respect to risk management, with respect to be able to price the products and deliver products more easily. They have to get to know the customers," Young said.

Miao Fuchun of the China Life Insurance Co told a recent seminar the state-owned firm "fully understood an opening-up of the financial market will have a very big impact on us, but we are fully prepared."