Foreign insurance companies that either operate in China or intend to build a presence in the promising market will have detailed regulations to follow starting from next month.
The nation's insurance industry watchdog, the China Insurance Regulatory Commission (CIRC), recently issued detailed Regulatory Provisions of Foreign-funded Insurance Companies, which will take effect on June 15.
Foreign-funded insurance companies include both wholly owned foreign companies and Sino-foreign joint ventures.
According to China's WTO commitments, foreign insurance companies will be allowed to hold a stake of 50 percent or less in joint venture life insurance companies.
The provisions were promulgated in 2002, but detailed rules addressing practical implementation were not covered.
The issues include requirements and application procedures for opening new branches, and regulations on disbanding, liquidating and closure.
The rules provide legal assurance for the implementation of China's World Trade Organization commitments concerning the insurance industry, said a spokesperson for the commission.
The detailed rules will also help enhance the transparency and the effectiveness of the provisions, the spokesperson said.
The rules require that foreign-funded insurers operating in China have no less than 200 million yuan (US$24 million) in registered capital or operational capital. Those that have not met this requirement should do so within two years after the rules come into force.
The rules also clarify regulators' obligations. After receiving foreign-funded insurers' application packages for establishing branches, the CIRC should decide whether or not to approve them within 20 days. Reasons must be provided if the application is denied.
Since the end of April, 38 foreign-funded underwriters have started operations in China, setting up 65 operational branches.
(China Daily May 24, 2004)
