Insurers are offering more foreign currency-denominated products to target China's growing number of expatriates and upper-income residents.

The products not only meet the demand for high-end financial protection but can also help reduce part of China's mounting forex reserves and curb illegal underground policies.

The Shanghai branch of AIU Insurance Co chose Shanghai as the testing ground for its healthcare insurance products which mainly target foreigners in the city, which has the biggest pool of expatriates in China.

"We see a warm market response for the products ever since we launched them in August in Shanghai," said Susan He, an AIU official. "The performance is getting very close to our target", though she did not reveal more details.

Among the products AIU is offering is one which provides global medical coverage including dental and maternity expenses of up to US$2 million annually. The premium on the product averaged from US$4,000 to US$6,000 per year.

More than 51,000 expatriates are working in Shanghai, according to Shanghai Labor and Social Security Bureau statistics ended June 30. The figure may more than double if one includes their family members in the metropolis.

AIU is considering expanding the products to other cities and the insurer has not met with any hurdle from the insurance authorities, she said.

AIU is not the only insurer seeking the golden egg in the market.

In late October, Chindex International Inc, a NASDAQ-listed company, tied up with FESCO Insurance Brokerage Co to start a health insurance product with an annual coverage of up to US$1 million in China to target the country's growing middle- and upper-income classes.

The product is also the country's first health insurance plan offered by a preferred provider organization as the United Family Hospitals & Clinics, a private hospital network under Chindex, is preferred to offer medical providers with its five locations in Beijing and Shanghai.

"We are not worried about the sales of the product as we launch it to meet market needs," said Wang Xiaoping, chief executive officer of FESCO Insurance Brokerage.

These products being launched can help channel part of China's massive foreign exchange reserves which topped U$1 trillion and is the world's largest.

Chinese authorities are stepping up efforts to curb illegal policies as they can't do anything to protect the interests of policy buyers when complaints are raised about such policies, said Wu Qinghua, an official with the Shanghai Bureau of the China Insurance Regulatory Commission.

In August, the local insurance watchdog fined Panoramic Holdings Ltd Group of Companies 300,000 yuan (US$37,975) for selling illegal healthcare insurance policies to expatriates.

Industry insiders expect the size of China's healthcare industry to equal by 2020 that of the United States, where healthcare expenditure accounts for 16 percent of its gross domestic product. 

Editor: Yan