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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