BIZCHINA / Finance
WTO Commitments
Updated: 2006-04-18 10:59
1. Form of enterprise establishment
Foreign non-life insurers will be permitted to establish themselves as
branches or joint ventures (JV) with 51 percent foreign ownership. Within
two years of China's World Trade Organization (WTO) accession, foreign,
non-life insurers will be permitted to establish wholly owned
subsidiaries, i.e., with no establishment restrictions.
Upon the accession, foreign life insurers will be permitted a 50-percent
foreign ownership in a JV with a partner of their choice. For insurance
brokerages, JVs with a foreign equity up to 50 percent will be permitted.
Within three years of China's accession, foreign equity shares will jump
to 51 percent, and within five years, wholly foreign-owned subsidiaries
will be permitted.
For large-scale, commercial-risk insurance brokerages and re-insurance
brokerages, including international marines, aviation and transport
insurance brokerages, upon the WTO accession, JVs with foreign equity of
no more than 50 percent will be permitted. Within three years of China's
accession, foreign equity shares will climb to 51 percent, and within
five years, wholly foreign-owned subsidiaries will be permitted.
The internal branching of an insurance firm will be permitted in line
with the phasing out of geographic restrictions.
2. Geographic Coverage
Upon the WTO accession, foreign life and non-life insurers will be
permitted to provide services in Shanghai, Guangzhou, Dalian, Shenzhen
and Foshan. Within two years of China's accession, foreign life and
non-life insurers will be permitted to offer services in the following
cities: Beijing, Chengdu, Chongqing, Fuzhou, Suzhou, Xiamen, Ningbo,
Shenyang, Wuhan and Tianjin. Within three years of China's accession,
there will be no geographical restrictions.
3. Business Scope
Upon the WTO accession, foreign, non-life insurers will be permitted to
provide "master policy" insurance of large-scale commercial risks without
geographical restrictions. Foreign, non-life insurers are permitted to
provide insurance to enterprises abroad, as well as property insurance,
related liability insurance and credit insurance to foreign-invested
enterprises in China upon accession. Within two years of China's
accession, foreign, non-life insurers will be permitted to provide a full
range of non-life insurance services to both foreign and domestic clients.
Foreign life insurers are permitted to provide individual (not group)
insurance to foreigners and Chinese citizens. Within three years of the
accession, foreign insurers will be permitted to provide health
insurance, group insurance and pension/annuities insurance to foreigners
and the Chinese.
On accession, foreign insurers will be permitted to provide re-insurance
services for life and non-life insurance as a branch, JV, or wholly
foreign-owned subsidiary without geographical or quantitative
restrictions on the number of licenses issued.
4. Licenses
On accession, licenses will be issued without quantitative limits.
Qualifications for establishing a foreign insurance institution are as
follows:
--The investor will be a foreign insurance company with more than 30
years of experience with a WTO member;
--It will have a representative office for two consecutive years in China;
--It will have total assets of more than US$5 billion at the end of the
year prior to application (except for insurance brokers).
Insurance brokers will have total assets of more than US$500 million.
Within one year of the accession, they will have total assets of more
than US$400 million. Within two years of the accession, they will have
total assets of more than US$300 million, and within four years, they
will have overthan US$200 million in assets.
5. Other Restrictions
At present, a 20-percent cession of all lines of primary risks for
non-life, personal accident and health insurance businesses with an
appointed Chinese re-insurance company will be required; this ratio will
remain unchanged upon the WTO accession. One year after the accession, 15
percent will be required; two years after the accession, 10 percent ;
three years after, five percent and four years after the accession, no
compulsory cession will be required. Foreign insurance institutions will
not engage in the statutory insurance business
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