On October 15, 2019, the State Council of China announced the long-awaited
amendment to the Administrative Regulations on Foreign-Invested Insurance
Companies (the “Amendment”), formally codifying the following measures previously
announced by the Chinese government to further open up the Chinese insurance sector
to foreign investors:
Investment by overseas financial institutions. The Amendment added a new
provision, permitting the overseas financial institutions to invest in foreign-invested
insurance companies, with detailed implementation rules to be formulated by the
China Banking and Insurance Regulatory Commission (the “CBIRC”). This
significantly expands the pool of investors beyond the traditional foreign insurance
companies. The definition and scope of “financial institutions,” however, are yet to
be clarified in the implementation rules.
Relaxation on market access requirements. The Amendment removed the
requirements that a foreign insurance company must have engaged in insurance
business for more than 30 years and have maintained a representative office in China
for at least two years before it can establish a foreign-invested insurance company in
Investment by foreign insurance group company. The Amendment now allows
foreign insurance group companies to establish foreign-invested insurance
companies in China, with detailed implementation rules to be formulated by CBIRC.
Normally a group holding company has more assets and strengths than its
subsidiaries, which would make it easier for a foreign insurance group company to
meet the various eligibility requirements for establishing an insurance company in
China, such as total assets of at least US$ 5 billion.
The above amendments took effect on October 15, 2019.
It is expected that the CBIRC will amend the Implementation Rules for the
Administrative Regulations on Foreign-Invested Insurance Companies accordingly and
issue further detailed rules to implement other opening-up commitments announced by
the Chinese government in the recent two years including the removal of 51% foreign
ownership restriction in the life insurance sector in 2020.