| CIRC Released Policies for Access of Foreign-invested Insurance |
| Wednesday,December 20,2006 Posted: 06:17 BJT(2217 GMT) International Financial News |
According to the Contents Related to Insurance in the Legal Documents of China’s Accession to the WTO recently released by China Insurance Regulatory Commission (CIRC), by Dec. 11th this year Chinese insurance industry had almost realized full opening up except for such restraints that the foreign property insurance company could not run statutory business, and that foreign capital in life insurance company must be in the form of joint ventures, in which the share ratio could not surpass 50%. Currently China has no regional limits on the access of foreign insurance institutions and no test of economic demands or limitation on number of business licenses will be set up, and theoretically foreign investment can be used in any city for establishing an insurance institution. However, the condition for setting up an insurance institution still need to comply with the “5, 3 and 2” provisions, i.e. the investor should be a foreign insurance company with 30 years history of business operation in a WTO member country, it must set up a representative office in China for 2 years consecutively; and the total year-end assets prior to application should not be lower than USD5b. The CIRC will have examination and approval according to the Regulations on the Administration of Foreign-funded Insurance Companies as well as the Detailed Rules for its Implementation executed in Jun.2004. In light of different business areas, in life insurance there are no other restraints except that the form of company must be a joint venture and foreign share ratio should not surpass 50% (exclusive of AIA Ltd., which entered China in 1992 as a wholly-owned venture). Foreign life insurance can provide any kind of life insurance services to groups and individuals of Chinese citizens enjoying the full national treatment. In non-life insurance, the form of foreign non-life insurance company can be a branch, a joint venture and a wholly owned company with the same condition for setting up as a life insurance company. However, in terms of business scope foreign property insurance company is not allowed to operate statutory insurance businesses such as third-party obligatory insurance of automobile, and obligatory insurance of drivers or carriers of public buses as well as other commercial transportation tools. |
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