China throws open insurance sector after WTO membership

Beijing, Dec 12: New WTO member China has wasted little time prying open its tightly held insurance sector in the two days since joining the global trade body, with a flurry of foreign firms announcing new licences and expansions.

A Chinese woman passes a billboard in Beijing welcoming China’s entry into the WTO on Tuesday.

US insurers MetLife and New York Life and Japan’s Nippon Life Insurance Co announced they were given the go ahead to start operations on Tuesday — the day China’s 15-year quest ended in membership of the World Trade Organisation. The China venture of Canada’s Manulife said on Wednesday it had been given a green light to set up a second branch, while Japan’s Marine & Fire and Mitsui Sumitomo also received approval to set up branches.

For years, the China Insurance Regulatory Commission (CIRC) doled out critical licences at a snail’s pace and had been even slower to approve choices of location, partners and products — even after a licence had been given. But foreign insurers expect an easier time getting licensed to sell policies with China in the WTO and had begun queuing up even before it finally entered the global trade body for a crack at the market now dominated by Chinese firms. Domestic insurers, which hold 99 per cent share of the market, will now face stiff competition from overseas firms eager for a crack at the rapidly growing market.

Nippon Life said it aimed to become the first Japanese insurer to sell policies a market it estimated as worth nearly $12 billion and growing at 15 percent annually. Under its WTO commitments, China will allow “effective management control” in life insurance joint ventures, although it will cap foreign stakes to 50 percent. It will also phase out geographical restrictions in three years, allow foreign insurers into group, health and pensions over five years and permit wholly owned non-life subsidiaries in two years.

— Reuters