BEIJING, June 14 (Xinhua)-- China's insurance market should keep an eye on price competition and improve productivity and efficiency as it moves from a monopoly to the open market, Michel M. Lies, member of the executive board of Swiss Reinsurance company, told Xinhua.

"There is a point the monopoly begins to feel upset to loose market share and react by price", said Lies noting that, "price competition is a problem for the industry and not for clients."

China's life and non-life insurance markets are dominated by China Life and PICC Casualty and Property Company who had respective market shares of 44.7 percent and 51.5 percent at the end of 2005. Their market share has declined in the more competitive market.

The insurance market also needs to improve productivity and efficiency, he said, "I am impressed by the number of agencies here but less impressed by the number of clients each agency has."

As to the country's reinsurance market, Lies said the end of compulsory reinsurance with China Re was good news for both China Re and its competitors. It demonstrates the maturity of the market and the readiness of China Re to compete with foreign players.

In line with World Trade Organization agreements, compulsory reinsurance through the only national reinsurer is to be eliminated this year.

"We are happy to see China no longer has a monopoly in the reinsurace market and is willing to let China Re compete. We would also like to see it to expand outside of China as it is the rules for the game of reinsurance to diversify the risk in the international market", Lies noted.

A reinsurance company is one paid by an insurance company to assume the risks of the later's policies. The only local reinsurance company in China now is China Reinsurance Group.

China had 93 insurers as of March this year and the reinsurance market is now open to foreign investors in the insurance industry and the world's biggest reinsurers -- Swiss Re, Cologne Re and Munich Re, and Lloyd's have all established reinsurance operations in China. Enditem