Further Opening Up Of China's Insurance Market – It Is Happening!

Legal News & Analysis - Asia Pacific - China - Insurance & Reinsurance

Asia Pacific Legal Updates


5 July, 2018


Further Opening Up Of China's Insurance Market – It Is Happening!


Removal of the restrictions on foreign equity ownership in the life insurance sector


Foreign shareholding in China's life insurance sector has been capped at 50%.  This has given international insurers no choice but to accept an operating model where the local partners control and operate their China life insurance joint ventures. 


The PRC State Council foreshadowed a relaxation of the ownership cap as early as in January 2017.  However, no details or timetable were then provided.  This was then followed on 10 November 2017, immediately after the China-US summit, by another announcement that foreign investors will be allowed to increase their shareholding of a Chinese life insurance company to 51% within a period of three years and 100% within 5 years.   


However, this timetable has since been reduced significantly.  On 11 April 2018, at the final day of the Boao Forum for Asia, the People's Bank of China and its Governor Yi Gang announced that the right to increase a shareholding to 51% of a life insurer will be implemented within a few months.  China Banking and Insurance Regulatory Commission ("CBIRC") formally confirmed on 27 April 2018 that the foreign shareholding limit has been raised to 51% and that the cap will be removed entirely after three years.


The Shanghai Financial Services Office has announced that the Hong Kong headquartered regional insurer FWD has applied for a life insurance licence.  According to media reports, FWD wishes to hold 51% of the new life insurance joint venture.  This will be an interesting test case.


Access to the insurance brokerage sector


International insurance brokers have until recently only been permitted in niche markets such as servicing large corporations, reinsurance, international shipping, aviation and transport.  On 27 April 2018, the CBIRC published detailed implementing rules for the insurance brokerage sector.  The new rules will allow existing foreign invested insurance brokers in China to apply for a new business licence which will allow them to offer a much broader range of services and potentially take on local insurance brokers in the fierce competition for the larger domestic customer base. 


International insurance brokers who wish to set up a licensed subsidiary in Chinamust meet the relevant tests including having 30 years of business history, total assets of USD 200 million and having had a China representative office for at least two years. 


Already on 15 May 2018 Willis Towers Watson announced that it had received an updated licence enabling it to transact all relevant insurance brokerage business in China. 


Access to the insurance agency sector


Chinese insurance agencies act on behalf of insurance companies in connection with the sale of insurance products, collection of premiums, claim investigations and settlement or other agency services approved by the CBIRC. 


Foreign investors have largely been restricted from participating in this sector.  The exceptions have been (i) making minority-investments not exceeding 25% and (ii) certain preferential arrangements for Hong Kong and Macao investors. 


In its announcement on 27 April 2018, CBIRC confirmed that qualified foreign investors will also be granted access to the insurance agency sector.  The implementing rules are yet to be issued. 


Access to the insurance appraisal sector


As in the insurance agency sector, foreign investors' participation in Chinese insurance appraisal firms has been restricted to 25%. 


CBIRC's announcement on 27 April 2018 confirmed that this sector also will be opened up but to date the implementing rules have not been issued.

Ashurst Logo

For further information, please contact:


Daniel Öhvall, Ashurst