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HONG KONG-Members of Hong Kong's insurance community see no need to cross their fingers during the pomp and ceremony of tonight's transition to Chinese rule.

Insurance companies, brokers and risk managers are expressing confidence that it will be "business as usual" after 155 years of British rule ends at midnight and the People's Republic of China begins to put its imprint on the Special Administrative Region of Hong Kong.

While the population waits nervously for coming restrictions on civil liberties-limits on the right to demonstrate, for example-the business community is putting on an optimistic face.

The insurance industry's main concern is that the Chinese eventually could make changes to the region's legal system that would make it an inhospitable and unpredictable place to operate.

That uncertainty, however, is not scaring away Hong Kong-based corporations.

In fact, the number of insurers is increasing as the region becomes part of the vast Chinese market.

Businesses operating in Hong Kong do expect some changes in the legal system. But, how far the Chinese government might go in rewriting civil and commercial law is a matter of speculation.

"That's the wild card," according to Joseph A. Graziano, executive vp and managing director of international operations for Reliance National Insurance Co. in New York.

"The British system was one that everyone was real comfortable with," Mr. Graziano said.

Under the Joint Declaration that China and Britain agreed to in 1984, a 50-year transition begins this week, during which Hong Kong will enjoy autonomy in most areas.

Hong Kong will retain its legal system, which is based on English Common Law, rather than adopt Chinese law, which has different applications and procedures for review.

One change calls for Hong Kong to have a Court of Final Appeals that will hear appeals on commercial and civil matters. The court is instructed to adjudicate matters on common law precedents. Under British rule, judicial appeals were heard by the Privy Council in the United Kingdom.

"There is genuine concern about the legal system," said C.J. Steggles, general manager-China/East Asia for Hong Kong-based HSB Engineering Insurance Ltd. "As we go forward toward the 21st century, what's going to happen with statutes, with legal cases? Decisions that were precedents before, will they remain intact?"

"What if a foreign firm gets into a disagreement with a Chinese firm?" Mr. Steggles asked, noting there are questions over how arbitration matters in such cases might be handled under the new regime.

Mr. Steggles emphasized, though, that the Chinese are aware that the rest of the world is closely watching their moves in Hong Kong. "They could reverse themselves a number of years if they take a wrong turn."

"I think the Chinese want Hong Kong to succeed," agreed Mr. Graziano. "If it's badly handled, it will be noticed around the world."

The Joint Declaration means the legal system must be retained during the 50-year period and likely will remain indefinitely, according to George F. Lazovsky, Hong Kong-based chairman of J&H Marsh & McLennan-China.

In a faxed reply to questions about the implications of this week's changeover, Mr. Lazovsky suggested there likely will be a "substantial convergence" between Hong Kong and Chinese law during the 50-year transition period.

But, he added in his response, "As a practical matter, if the legal system were to change abruptly in 50 years, commerce would be seriously interrupted. It is very unlikely that an interruption is in anyone's interest."

Hong Kong's continuing autonomy and preservation of most of its legal system means risk managers, brokers and insurers have little concern for the moment, Mr. Lazovsky suggested. "No wild cards in the commercial deck," he noted.

Risk managers with Hong Kong operations for the most part will be buying the same coverages under the new regime that they purchased when the British were in control. There appears to be little concern over political risks that could leave businesses exposed to losses.

Hong Kong businesses aren't concerned with currency risks because there will continue to be no exchange controls and the Hong Kong dollar will remain fully convertible.

Mr. Steggles pointed out that there is little incentive for insurrection to brew among a population that enjoys the kinds of amenities Hong Kong provides.

"People are still receiving a good education," he said, and have available a fine transportation system, top-notch telecommunications and other comforts.

Some worry that crime could increase if Chinese mainlanders have easier entrance to Hong Kong.

Mr. Steggles pointed out that while the Chinese have stated that entry will be controlled, the lure will be great for illegal immigrants. "It's what Miami is to the Cubans. The streets are paved with gold; everybody has a car. That's what they see here."

If border crossings aren't controlled, "We potentially could see an increase in crime," he said.

There likely will be limits on press freedoms and the citizens' rights to demonstrate, Mr. Steggles said. "But that shouldn't surprise us," because those restrictions exist in other parts of China.

"On a personal basis, people are apprehensive," said Clyde Fritz, a J&H Marsh & McLennan senior vp in New York with clients based in Hong Kong. "On a professional basis, I don't sense that many are overly concerned."

"We're not concerned," said David Herratt, insurance and claims manager at China Light & Power Co. Ltd. in Hong Kong.

China Light & Power hasn't sought out any new coverages for risks that could emerge as a result of the changeover, Mr. Herratt said, and the utility has no plans to add coverage for operations that include a $2.5 billion project in China's Shandong Province.

Although pro-democracy protests are almost certain to be held this week, they are not expected to trigger a harsh response from the Chinese. Mr. Herratt said there is little risk of serious disruption because the new rulers want the world to view the transition favorably.

Said Dean R. Jobko, risk management principal at The Southern Co. in Atlanta, "There may be some changes in the way things are done, but we don't anticipate any big changes." The Southern Co. earlier this year acquired Hong Kong-based Consolidated Electric Power Asia, a utility with power plants in China and the Philippines.

"I think people outside of Hong Kong are more torqued out about it" than those who do business there, Mr. Jobko said.

Mr. Herratt pointed to the influx of insurers to Hong Kong as a show of confidence in the stability of the region. "There are new risk-takers coming in," he noted, from China and other nations.

Mr. Graziano of Reliance National said his company soon will release details of a joint venture it is entering with a Hong Kong insurer. The operation will write professional liability, surety bond and other coverages.

"We don't have any significant concerns about Hong Kong," Mr. Graziano said. "As with any change, it's difficult to look into the future," he added, but it is hard to imagine the Chinese making changes that would derail one of the world's major financial centers.

"A lot of insurers are interested in doing something in Hong Kong," Mr. Graziano noted, and the regulatory climate is favorable for them to locate there.

While licensing requirements in China mean only about one foreign insurer per year is able to locate in that country, it's much easier for a company to join the 276 insurers doing business in Hong Kong. A Hong Kong insurer can be capitalized at about $2 million, while it takes about $100 million in China.

Insurers also can rely on terms of the Joint Declaration that continue separate insurance regulation in Hong Kong.

American International Group Inc. has done business in Hong Kong for nearly 70 years and expects to be there for many more years.

In a written response to a query on the impact of the changes, Maurice Greenberg, chairman of AIG, lauded Hong Kong's infrastructure, "sophisticated financial markets and a talent pool as good as any in the region."

Mr. Greenberg wrote that AIG does not expect "any changes of significance in the business or regulatory environments. In fact, we believe Hong Kong has a brighter future once the transition takes place."