Qianhai seeks to lower threshold for Hong Kong insurers
The Qianhai-Shekou Free Trade Zone will roll out the red carpet for Hong Kong insurance companies by lowering the threshold, but the city’s insurers want more incentives to set up shop in the zone.
The move is a step forward in linking the finance industries of Hong Kong and Shenzhen closer, according to Wang Jinxia, assistant director-general of the Qianhai-Shekou Administrative Committee, adding that the insurance sector is the zone’s thrust area this year.
Hong Kong insurers, are, however, not excited, saying it would be attractive only if Beijing allowed them to do business nationwide or at least provide access to the entire Guangdong province.
According to China’s insurance regulations, Hong Kong-based companies are required to have more than US$5 billion of total assets. In addition, their headquarters need to have operated the insurance business for at least 30 years and their representative offices in China should have been running for more than two years. No Hong Kong insurer meets this requirement, according to Wang.
“We are in talks with the People’s Bank of China and the China Insurance Regulatory Commission to lower the three requirements for Hong Kong firms,” said Wang, without elaborating what the easier requirements would entail.
Nine insurance companies are registered in the zone with a total registered capital of 40 billion yuan. That includes the zone’s first reinsurer, Qianhai Re, with a registered capital of 3 billion yuan, set up in March.
Wang said leading global insurers are eyeing a business presence in Qianhai. Aviva-Cofco Life Insurance, a joint venture between UK-based Aviva and China’s Cofco, has signed an agreement to set up its headquarters in Qianhai. Wang sees more such insurance companies, including local and Sino-foreign ventures, to come this year.
Chan Kin-por, a Hong Kong lawmaker representing the insurance sector, welcomed the Qianhai move but said: “If the relaxation only allows Hong Kong insurance companies to set up in Qianhai for residents there, it won’t be attractive. It would be very attractive if Qianhai-based Hong Kong insurers are allowed to do business for the whole country or at least some southern provinces, or Guangdong,” Chan said.
“Right now only international big players are setting up shop in China. Hong Kong insurers would like to see the mainland regulator treating us like other local insurers, which need only a capital of 200 million yuan. Since Hong Kong is part of China, we should be treated like other domestic insurance companies.”
Haywood Cheung, chairman of Target Insurance (Holdings), a Hong Kong-listed car insurer, said it would be good if Qianhai lowered the requirements for Hong Kong-based insurers.
“Qianhai is so close to Hong Kong, it would be natural for Hong Kong insurers to expand there. If the requirements are indeed set lower, we would consider setting up in Qianhai,” he said.
The Qianhai-Shekou area, spanning 28.2 square kilometres, is one of the three bonded zones of the Guangdong Free Trade Zone (FTZ), focusing on finance, modern logistics and technology services industries. The other bonded zones are in Nansha and Hengjin.