Insurance companies operating in China face far stricter capital requirements under a recent circular issued by the People's Bank of China (PBOC) which supplements the new insurance law. The circular, yet to be announced publicly, covers grey areas in the new insurance law issued last year, such as capital requirements, profit allocation and other operational details. The circular stipulates all national insurance companies are required to have a minimum capital of 500 million yuan (about HK$465 million). Branches in each province, autonomous region or city directly under the central government would be required to have a minimum capital of 50 million yuan. Insurance company headquarters would be able to inject a maximum 60 per cent of the capital of a branch - that means each branch would have to be able to afford at least 20 million yuan in capital by itself. Under the new regulations, the total capital required for a national insurance company would be much higher than the minimum capital requirement of 200 million yuan stipulated in the insurance law. The minimum capital requirement of a regional insurance company is 200 million yuan. Insurance companies which wanted to expand their operations would need to fulfil specific premium requirements. For example, an insurance company could apply to set up a new branch if it had secured an extra premium of 100 million yuan in a province or an autonomous region. Each city could not have more than one branch. Insurance companies need to fulfil minimum premium requirements when they want to set up other types of offices under a provincial branch. Many practitioners were disappointed the circular failed to stipulate new investment instruments available for insurance companies apart from bonds and bank deposits. It is uncertain if the state council will open more instruments to insurance companies amid complaints investment tools for insurance companies are too limited. The circular specifies minimum reserve requirements for insurance companies of different sizes. In a bid to upgrade the quality of insurance practitioners, described as a main problem for the insurance industry, the PBOC required all insurance companies to have at least 60 per cent of their staff possessing recognised qualifications. The PBOC listed the types of insurance products allowed to be sold by life insurance companies and property insurance companies. The central bank was to set fixed premium rates for different types of products.