| More Foreign Companies Enter China's Insurance Market |
| Thursday,December 14,2006 Posted: 11:19 BJT(0319 GMT) Xinhua |
More foreign insurance companies are entering into China's insurance market while China has gradually opened its insurance industry under its commitment to the World Trade Organization (WTO). However, foreign companies are still facing some restrictions. With almost 200 offices set up by 135 foreign-funded insurance companies, the range of products and services they can offer is limited. At the end of 2004, China's insurance industry concluded its interim period after the country's WTO accession, almost fully opening up to foreign competition. Foreign companies, however, are still banned from providing compulsory cover on motor vehicle traffic accident liabilities, because the government did not agree to permit foreign insurance companies to manage compulsory insurance business when it entered WTO at the end of 2001. Foreign companies wanting to establish life insurance companies in China must invite Chinese investors and the maximum foreign shareholding is 50 percent. The insurance industry had become a pioneer in the opening-up of China's financial sectors, said Meng Zhaoyi, director of the International Department of the China Insurance Regulatory Commission (CIRC). Figures from CIRC show 47 foreign-funded insurance organizations from 15 countries and regions have set up 121 operating branches in China. By the end of 2005, the market share of foreign-funded companies in China's insurance market was 6.92 percent, 5.34 percentage points higher than that before China's entry into the WTO. In the past five years, foreign funds of more than 60 billion yuan (US$7.69 billion) have entered China's insurance market by way of opening branches, establishing Sino-foreign joint ventures and equity participation in Chinese insurance companies. The premium income of foreign insurance institutions in China in the first ten months this year topped 19 billion yuan (US$2.4 billion), according to the CIRC. According to Meng, China will guide the development of foreign insurance companies in three aspects: support for foreign companies to hold shares in Chinese companies as strategic investors; guidance for foreign companies to mainly develop liability, agricultural, endowment and medical service insurance businesses; and to encourage foreign companies to enter into markets in northeast China, the country's traditional industrial base, as well as the vast mid and western area of China, so as to push forward the balanced development of regional economy. |
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