Broking makes way for foreigners
Foreign firms will soon be allowed to operate insurance broking businesses in the mainland on a joint venture basis as part of Beijing's moves to open up its financial sector.
People's Bank of China (PBOC) foreign financial institutions deputy director Zhang Xunhai yesterday said Beijing would soon approve one or two large insurance broking firms to operate joint ventures in the mainland.
Foreign insurers would also be allowed to buy up to a combined 25 per cent of domestic insurance firms, with each taking no more than a 5 per cent stake, Mr Zhang said.
Mr Zhang said the details would form part of the amendments to regulations governing foreign insurance companies in the mainland, first published in 1992 and now being approved by the State Council.
'We hope the rules will be announced as soon as possible,' he said.
As the mainland's insurance market was in the initial stages of development, domestic insurers were undertaking internal restructuring and regulators were developing regulations, he said.
'So China's insurance market should be opened to the outside world in a prudent and gradual manner under such circumstances,' he said. 'Only a very limited number of foreign insurance companies can receive licences.' Beijing allows foreign insurance companies to set up branches or joint ventures if they are to conduct property insurance. For life insurance, foreign firms can only set up a joint venture, with the stake not exceeding 51 per cent.
By the end of last year, 99 foreign insurance firms or intermediaries had established 181 representative offices in the mainland, while just five insurance companies had established nine operational entities, which were allowed to sell policies.
Britain's Royal Sun Alliance and Australia's Colonial Mutual have recently received approval to operate, following the lead of American International Group (AIG) and Tokio Marine & Fire Insurance.