What are the current limitations on foreign insurance companies and do the regulators intend changing them in the future?
Pursuant to China's WTO commitments, foreign companies are now allowed to establish non-life insurance companies with 51% ownership as joint ventures or branches and wholly foreign-owned subsidiaries will be permitted from December 11, 2003. Life insurance companies will be held to a 50% foreign ownership cap indefinitely. Geographic restrictions will be phased out by December 11, 2004, but some cities may open ahead of schedule.
Foreign firms may now choose joint venture partners that have no previous financial industry experience. One complication under the new rules, however, is that foreign insurers must choose partners before the preliminary application phase--in the past, insurers could hold off on identifying partners until the second phase of their application. CIRC has also issued rules to clarify the application process for agents, brokers, and appraisers. Revision of the PRC Insurance Law is expected this year.
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