By Jeremy Page
BEIJING, Feb 21 (Reuters) - EU negotiators trying to cut a deal on China's entry to the WTO this week will seek further concessions on access to the insurance market, including more licences for European insurers, industry sources said on Monday.
Beijing and the European Union began new talks on China's entry to the World Trade Organisation on Monday with the Europeans keen to top concessions on financial services made in a November deal with Washington, sources close to the talks said.
"The Europeans want at least parity with the Americans on insurance and that means more licences," said Hu Yan, Beijing chief representative of Prudential Plc, which was awarded a licence to do life insurance business in Guangzhou last year.
China has granted business licences to just 14 foreign insurers, including five U.S. firms and five European ones.
But some U.S. insurers hold more than one licence -- such as American International Group (NYSE:AIG - news), which does life and non-life business in Guangzhou, Shanghai, Shenzhen and Foshan.
"If you count the numbers, there is a slight deficit on the European side," said Hans-Jorg Probst, Beijing chief representative for German insurer Allianz .
"I think the Chinese government may extend one or two licences."
FIRMS QUEUING UP FOR PREMIUM PIE
Front runners among European insurers include Dutch financial group ING (NYSE:ING - news), Britain's CGU and Italy's Assicurazioni Generali, industry sources said.
More than 100 foreign firms are lobbying for a chance to sell policies to China's 1.2 billion people or cover risks in its massive infrastructure projects.
Allianz, which has a licence to sell life insurance through a joint venture in Shanghai, is lobbying for a second licence to do non-life business.
EU negotiators would also push Beijing to allow 51 percent foreign investment in life joint ventures, industry sources said. Under the China-U.S. deal, Beijing conceded 50 percent foreign investment in life.
But Probst said China would be reluctant to cede further control over the politically-sensitive life insurance market.
"This is a very touchy issue," he said. "It's more political than commercial. I think the Chinese will insist on 50 percent."
PORT CITY SEEN OPENING
However, Beijing was expected to be more flexible on the issue of geographic restrictions, which it agreed to eliminate within three years under the U.S. deal, sources said.
China had indicated it could open up the northeastern port of Dalian on WTO accession, presenting good business opportunities in marine and industrial insurance, industry sources said.
European insurers were also looking for guarantees they would be allowed to manage their own assets if they expanded into group insurance, sources said. Beijing has pledged to let foreign insurers move into group, health and pensions over five years.
"It must be clear that the licence covers asset management, not just the right to provide group insurance services," Hu said.
But Probst said foreign insurers would have to wait for China's capital markets and domestic insurance industry to develop before they could manage funds on such a large scale.
"You have to be on a level playing field with domestic insurers, and if they can't do it, then the Chinese government is highly unlikely to permit foreign insurers to do it," he said.
The EU delegation was also expected to press for more licences for foreign insurance brokers -- an issue which did not feature highly on the U.S. agenda, industry sources said.
Sedgwick, the British unit of Marsh and McLennan Cos. Inc (NYSE:MMC - news), is the only foreign broker approved to operate in China.
"I hope our concerns are properly raised," said Probst. "We hope they can slightly improve on the American accord.":
