BEIJING, Nov 23: China has promised to allow foreign companies greater access to its insurance market, state media reported on Friday, as Beijing detailed how it will open up the sector after WTO entry.

It is the first time China has spelled out precisely what it will do to liberalise the insurance sector under the terms of its World Trade Organization membership, which begins next month.

Industry regulator the China Insurance Regulatory Commission (CIRC) announced non-life insurers from abroad will be allowed to set up branches or joint ventures in China immediately after WTO entry, the China Daily said.

They will be able to hold as much as 51-per cent stakes in joint ventures, and two years after WTO entry, foreign non-life insurance firms can set up wholly foreign-owned subsidiaries in China, CIRC officials revealed at an insurance seminar Thursday.

Foreign insurers cannot currently have majority ownership.

Life insurers from abroad also will be allowed to set up joint ventures in China immediately after WTO entry, but they can hold no more than a 50-per cent stake.

Life insurers will be able to choose their own joint venture partners as opposed to the present policy, under which partners are chosen for them by Chinese authorities.

Both life and non-life insurers will be permitted to provide services in the cities of Shanghai, Guangzhou, Dalian, Shenzhen and Foshan upon WTO accession, the report said.

Currently, China restricts the companies to Shanghai and Guangzhou and only a few companies are permitted to participate even in these markets.

Two years after WTO entry, the businesses can expand to the cities of Beijing, Chengdu, Chongqing, Fuzhou, Suzhou, Xiamen, Ningbo, Shenyang, Wuhan and Tianjin, with all geographical restrictions to be lifted three years after entry, the official Xinhua news agency said.

Foreign non-life insurers will be permitted to offer property insurance to foreign-funded enterprises, but not Chinese companies, in China immediately after China joins the WTO.

Two years after entry, however, they will be able to offer all kinds of non-life insurance services to both Chinese and foreign customers.

China will also abolish restrictions on the number of licenses issued to foreign insurers right after WTO entry, although firms must still meet a strict set of business criteria, including 30 years’ of experience in a WTO member country, and total assets of no less than $5.0 billion.

Official statistics show China’s insurance sector registered 10-15 per cent revenue growth for several consecutive years.

However of the almost $20 billion of premiums paid last year, foreign insurers took only 1.0 per cent.

The CIRC will also change its role from that of controlling to supervising the companies, China Daily said, citing unnamed industry experts.

In future, the body will not have the right to prohibit insurance companies from establishing branches as long as they can demonstrate they have enough capital to ensure their solvency margins and have not violated regulations. —AFP