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Insurance Market Opened Further
The doors to China's tightly controlled insurance market were sprung open a bit further on Tuesday when eight European insurance companies were granted licences to set up insurance practices in the country, said industry sources.
Insurance experts say this is a clear indication of the Chinese Government's commitment to further open its insurance market. The new approvals bring the total number of licensed foreign insurers to 26, while the number of domestic insurers stands at only 13.
The eight licenses include four for life insurance and four for non-life insurance, said industry sources, who declined to be named.
French-based CNP Assurances, UK-based CGU, and Dutch-based Transamerica each got the green light from the China Insurance Regulatory Commission (CIRC) to set up life insurance joint ventures (JV) in open cities. France-based AXA, which is currently operating a life insurance JV in Shanghai, was allowed by the market watchdog to establish a sub-company of its Shanghai JV.
The German-based Gerling Insurance Company and the Allianz Group, and Swiss-based Zurich Insurance Company were permitted to launch non-life practices.
The UK-based Royal & Sun Alliance, operating a non-life company in Shanghai, got permission to set up a sub-branch company.
Transamerica and Royal & Sun Alliance could not be reached, but officials from the other six companies have confirmed the news, saying they were summoned to CIRC on Tuesday and told the news.
"Yes, we did get license approval, but our company prefers to keep things low-profile," Liu Min, chief representative assistant with French life insurer CNP's Beijing office.
CIRC, however, declined to comment.
But in an earlier conference this year, an official with CIRC told China Daily that the market watchdog would issue several licences to European insurers upon accession to the World Trade Organization (WTO) to beef up the confidence of foreign insurers in China's opening up policy.
China's WTO negotiations were concluded just at the end of this month, but the insurance licence decision has come prior to accession.
In May last year after China inked a bilateral agreement with the European Union (EU) on its entry into the WTO, the EU announced that China would grant seven licenses to EU insurance companies upon the country's WTO accession.
"With the new licenses plus the two issued to Dutch and an Italian insurance companies last July, China seems to have fulfilled its promise," said an industry expert.
A press release from the Gerling Insurance Group that reached China Daily on Thursday also said "A protocol signed by China and the EU stated that the Chinese Government would grant licenses to a couple of European insurers upon China's WTO entry."
"Most of the candidates have made contributions to the negotiations between China and the EU on the WTO issue," the Gerling press release added.
When the initial euphoria subsides, the major concerns will be how these companies will launch their new practices and whether there will be more licenses to come.
So far, China has opened only Shanghai and Guangzhou to foreign insurers. Life insurance companies can only operate in the form of joint ventures and have to confine their holdings to less than 50 per cent.
Source: China Daily
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