Sales of health insurance policies in China's big cities have surged since SARS (severe acute respiratory syndrome) hit in April.

But as compensation payments have also mounted, the insurance risk has grown and China's fledgling insurance industry is struggling to head off the SARS danger.

The epidemic has caused a number of problems in the industry, including a drop in premium for some types of services, higher payouts, and difficulty selling policies. Because the course of the epidemic disease is uncharted, a lack of statistics in the insurance industry means management risk remains uncertain.

Treatment costs for SARS patient are fairly high, and commercial insurance companies have so far not been able to fully play a role in supplementing basic social medical insurance.

Insurance companies profit from people's investment on future risks and the SARS outbreak initially worried insurance companies, according to analysts.

But prompted by relevant governmental policies, China's insurance industry responded rapidly to SARS outbreak. So far, the China Insurance Regulatory Commission (CIRC) has approved 52 products and services by 24 insurance companies.

Companies have also adopted various measures in their services to meet the demand of the public.

Wang Xianzhang, general manager of China Life Company, said life insurance could alleviate the economic burdens of accident and disease by helping people pay for unexpected medical costs.

Latest statistics show that life insurance premiums in Beijing reached nearly two billion yuan (US$0.25 billion) in April, up 69.84 percent on a year ago.

Premiums in Guangzhou and Shanghai also grew rapidly.

Health insurance has become one of the most popular arenas for insurance companies and specialized management will be the future trend, analysts said.

Insurance companies have been busy carrying on more research within the field and setting up quick response systems to find an effective balance between public and commercial interests.

Wu Bin, an expert with New China Life Insurance Company, said insurance companies should control management risks to promote stable and long-term development of the industry.

Experts say SARS has prompted the insurance industry to examine the process of developing new products. After SARS, people will pay more attention to the industry's basic function of risk control rather than a value-added service like investment.

The influence of SARS will inevitably enhance public demand for insurance. Wang Zimu, chairman of the board of the Huatai Property Insurance Company said that at a time of sudden crisis, insurance can help stabilize society, benefit people, and may strengthen public insurance awareness, thus providing opportunities for rapid industry development.

Establishing mature insurance awareness and rational risk consciousness may be the lesson learned by the people from the SARS threat, experts said.

"I will take precautions by buying different insurance policies just in case," said Chen Yinglan, a 29-year editor of a Beijing-based magazine.