By Yuan Min King & Wood Mallesons’ Finance & Securities group
On 11th April 2018, the Governor of the People’s Bank of China (“PBoC”), Yi Gang, introduced specific measures to further open up China’s financial market at the Boao Forum for Asia (“BFA”). The measures and who they impact include:
- The total foreign equity holding limits in China life insurance companies will be lifted from its current cap of 50% to 51% from the first half of 2018. China will remove all limits on foreign equity ownership in such companies after three years.
- Foreign-invested insurance companies will no longer need to maintain an authorized Representative Office in China for two years prior to making any such investment by the end of 2018.
Insurance Agent Companies:
- China will also remove the 25 percent ceiling on the current foreign ownership in an insurance agent company by the first half of 2018,, allowing more foreign investors to engage in such business.
Insurance Brokerage Companies:
- The current restriction on foreign-funded insurance brokerage companies to only operate in the areas of large-scale commercial insurance brokers, reinsurance brokers, international shipping, aviation and transportation insurance, and reinsurance brokerage will be liberalized in the first half of 2018.
- It is expected that foreign-funded insurance brokerage companies may also be further allowed to draft insurance plans for insurance applicants, select insurance companies and process insurance application formalities; assist insured parties or beneficiaries in making claims; and provide disaster prevention or loss prevention or risk evaluation and risk management advisory services to entrusting parties and other businesses approved by the CIRC.
Insurance Adjustment Companies：
- Currently, foreign ownership in an insurance adjustment company must be less than 25%, but this is expected to be further liberalized in the first half of 2018. More foreign investors would therefore be allowed to engage in the operation of insurance adjustment businesses.
According to Yi Gang, China will witness more stringent financial regulations alongside the move towards further opening up of its financial market.
In the insurance industry, restrictions on the access of foreign capital and the scope of business of foreign-funded institutions are expected to ease, narrowing the gap and differences in restrictions between Chinese and foreign-funded insurance companies. However, China will continuously improve their regulatory supervision of the insurance industry in order to effectively prevent and resolve insurance risks, maintain the stability of the insurance industry, and to ensure that relevant activities in the industry are conducted in a standardized and orderly manner.