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What are the major problems faced by foreign investors in China's insurance industry?
- The procedure for establishing branches of joint ventures and branches of foreign non-life insurers is not clearly defined. Also, no clear definition is available of what constitutes a region for a regional insurer.
- The new regulation, promulgated by the end of 2002, doubled the capital requirement from 100 Million RMB to 200 Million RMB for non-life insurers, which is the minimum capital requirement for a regional insurer. This change puts the branch, with regard to the capital requirement, on an equal footing with joint ventures and Chinese regional insurers. However, where a Chinese non-life insurer can operate in a region, the branch of a foreign non-life insurer is limited to the borders of a city (e.g. Shanghai). This regulation makes branches more expensive than companies and the overall capital requirements in the market makes China less attractive for investment in comparison with other countries.
- Insurance intermediaries, brokers, agencies and loss adjusters are supervised by the CIRC. However, it is not clear what licenses are required for the professional actuarial consulting firms that provide insurance related consulting services in China and who should issue these licenses. In other markets, actuarial consulting services are often regulated by their own professional organizations, which often require the actuarial practitioners to pass actuarial exams and to be qualified as "the actuary" under one or more recognized actuarial exam and qualification systems. Senior CIRC officials have made several public remarks to welcome international actuarial firms to practice in China. Several international actuarial firms based outside China have been retained by Chinese and foreign insurers in China to provide consulting services for various assignments. These include IPO or restructuring related appraisals and valuations, product development and pricing, business planning and actuarial IT systems. China needs to clarify these licensing requirements to allow international actuarial firms, based in China, to be able to practice actuarial related consulting services here.
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