A Sino-US joint venture insurance brokerage company is expected to get a go-ahead signal within a month, making it the first foreign-funded brokerage firm to earn a license in China's insurance market.
The world's second largest insurance brokerage firm, Chicago-based Aon Corp, said yesterday that it will soon receive a green light from the regulatory authorities to form an alliance with Cofco, one of China's largest state-owned enterprises.
The license is scheduled for release immediately after China's official accession into the World Trade Organization (WTO), expected on December 11. WTO membership means the country will further open its domestic market to foreign investment.
The move would play a pioneering role in the opening of China's insurance brokerage market, which is still relatively underdeveloped compared with the global insurance market.
"We could bring our latest expertise and management skills into the market," said Michael O'Halleran, president and chief executive officer of the company, who is in Beijing for a five-day visit that includes talks with Chinese insurance regulatory authorities and business insiders.
Headquartered in Shanghai, the country's financial hub, the 50-50 joint venture will focus on the development of the insurance brokerage business for large multinationals, including joint ventures and foreign-funded firms located in China.
But the joint venture will not be allowed to conduct business with domestic enterprises or individuals after receiving its license.
"We had fantastic discussions with our partners about the launch of the joint venture yesterday," said O'Halleran.
Insurance brokerage businesses remain a fledgling industry in China, with only a dozen domestic firms in business, and few of them have a successful track record due to the insolvency of the markets.
Other brokerage firms include 45 insurance agent firms and eight insurance rating firms, with some 100 other companies now in the preparatory stages for developing businesses in China.
China yesterday unveiled a set of regulations governing the development of brokerage firms, making the market more transparent for foreign investors seeking a presence in China.
"The insolvency of the brokerage market has had negative impacts on the growth of China's insurance market," said Meng Long, deputy director with the Brokerage Department of China Insurance Regulatory Commission (CIRC), watchdog of the nation's insurance industry.
(China Daily November 30, 2001)
