Foreign insurance companies that either operate in China or
intend to build a presence in the promising market will have
detailed regulations to follow starting from next month.
The nation's insurance industry watchdog, the China
Insurance Regulatory Commission (CIRC), recently issued
detailed Regulatory Provisions of Foreign-funded Insurance
Companies, which will take effect on June 15.
Foreign-funded insurance companies include both wholly owned
foreign companies and Sino-foreign joint ventures.
According to China's WTO commitments, foreign insurance
companies will be allowed to hold a stake of 50 percent or less in
joint venture life insurance companies.
The provisions were promulgated in 2002, but detailed rules
addressing practical implementation were not covered.
The issues include requirements and application procedures for
opening new branches, and regulations on disbanding, liquidating
and closure.
The rules provide legal assurance for the implementation of
China's World Trade Organization commitments concerning the
insurance industry, said a spokesperson for the commission.
The detailed rules will also help enhance the transparency and
the effectiveness of the provisions, the spokesperson said.
The rules require that foreign-funded insurers operating in
China have no less than 200 million yuan (US$24 million) in
registered capital or operational capital. Those that have not met
this requirement should do so within two years after the rules come
into force.
The rules also clarify regulators' obligations. After receiving
foreign-funded insurers' application packages for establishing
branches, the CIRC should decide whether or not to approve them
within 20 days. Reasons must be provided if the application is
denied.
Since the end of April, 38 foreign-funded underwriters have
started operations in China, setting up 65 operational
branches.
(China Daily May 24, 2004)