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The contents related to insurance industry in the legal documents of China's accession to WTO are hereby distributed for internal reference. The departments under this Commission and the insurance regulatory offices shall earnestly organize the study and grasp the relevant contents of commitments made on insurance industry. CONTENTS RELATED TO INSURANCE INDUSTRY IN THE LEGAL DOCUMENTS OF CHINA'S ACCESSION TO WTO I. COMMITMENT SCHEDULE (1) LIFE INSURANCE a. At the time of accession Foreign life insurance companies are allowed to establish equity joint companies in Shanghai, Guangzhou, Dalian, Shenzhen, and Foshan, the proportion of foreign investment may not exceed 50%, and the foreign parties may choose their equity joint partners freely. The aforesaid companies are allowed to provide individual (non-group) life insurance services to foreign citizens and Chinese citizens. The issuance of business permits is not subject to economic demand tests or restrictions on the number of permits, the conditions for establishment are as follows: (1) the investor shall be a foreign insurance company which has operated for over 30 years within any WTO member state; (2) the company shall have set up a representative office in China for two consecutive years; (3) the total asset value of the company at the end of the year before the application is filed shall be no less than US$5 billion. b. Within two years after the accession The opening area is expanded to Beijing, Chengdu, Chongqing, Fuzhou, Suzhou, Xiamen, Ningbo, Shengyang, Wuhan, and Tianjin. c. Within 3 years after the accession Geographical restrictions shall be lifted, equity joint companies shall be allowed to provide health insurance, group insurance, and pension/annuity services to Chinese citizens and foreign citizens (there shall be no other restrictions except those on the proportion of foreign investment of no more than 50%, and the establishment conditions). (2) NON-LIFE INSURANCE a. At the time of accession Foreign non-life insurance companies shall be allowed to provide international shipping, aviation, and transport insurance businesses. Foreign non-life insurance companies shall be allowed to establish branch companies or equity joint companies in Shanghai, Guangzhou, Dalian, Shenzhen, and Foshan, the proportion of foreign investment may reach 51%. The aforesaid companies shall be allowed to undertake "blanket policy" and "large-scale commercial insurance" without geographical restrictions, to provide non-life insurance for overseas enterprises, and property insurance, related liability insurance and credit insurance for foreign-funded enterprises in China. The issuance of business permits shall not be subject to economic demand tests or restrictions on the number of permits, the establishment conditions are completely the same as those for life insurance companies. b. Within 2 years after the accession Foreign non-life insurance companies are allowed to establish solely foreign-funded subsidiary companies. The opening area shall be expanded to Beijing, Chengdu, Chongqing, Fuzhou, Suzhou, Xiamen, Ningbo, Shengyang, Wuhan, and Tianjin, and the said companies shall be allowed to provide all-sided non-life insurance to foreign and Chinese customers. c. Within 3 years after the accession The geographical restrictions shall be lifted (there shall no restriction other than the establishment conditions). (3) REINSURANCE AND STATUTORY REINSURANCE a. At the time of accession Foreign insurance companies shall be allowed to undertake reinsurance across the border. Foreign insurance companies shall be allowed to provide reinsurance for life insurance and non-life insurance by the form of subsidiary company, equity joint company, or solely foreign-funded subsidiary company, there shall be no geographical restrictions or limits on the number of business permits issued. The issuance of business permits shall not be subject to economic demand tests or limits on the number of permits, and the establishment conditions are completely the same as those for life insurance companies (there shall be no restrictions other than the establishment conditions). Foreign-funded insurance companies are not allowed to undertake statutory reinsurance business. At the time of accession, a foreign insurance company shall reinsure 20% of all of its basic risk business of non-life insurance and individual accident and health insurance with a designated reinsurance company of China. b. Within 1 year after the accession The reinsurance proportion shall be 15%. c. Within 2 years after the accession The reinsurance proportion shall be 10%. d. Within 3 years after the accession The reinsurance proportion shall be 5%. e. Within 4 years after the accession Compulsory reinsurance shall be cancelled. (4) INSURANCE BROKERAGE a. At the time of accession Foreign insurance brokerage companies shall be allowed to provide "large-scale commercial insurance" brokerage services, and international shipping, aviation, and transport insurance brokerage and reinsurance brokerage services across the border. Foreign insurance brokerage companies shall be allowed to establish equity joint companies in Shanghai, Guangzhou, Dalian, Shenzhen, and Foshan, and the proportion of foreign investment may reach 50%. The aforesaid companies shall be allowed to engage in "large-scale commercial insurance" brokerage, reinsurance brokerage, and the brokerage for international shipping, aviation, and transport insurance and the reinsurances thereof. At the same time, those companies shall be allowed to provide "blanket policy" brokerage services on the basis of national treatment. The issuance of business permits shall not be subject to economic demand tests or limits on the number of permits, a minimum year-end total asset value of US$500 million is required for the application for establishing a company, the other conditions are the same as those for life insurance companies. b. Within 1 year after the accession The minimum year-end total asset value required for application for establishing a company shall be US$400 million. c. Within 2 years after the accession The minimum year-end total asset value required for application for establishing a company shall be US$300 million. d. Within 3 years after the accession The geographic restrictions shall be lifted, and the proportion of foreign investment may not exceed 51%. e. Within 4 years after the accession The minimum year-end total asset value required for application for establishing a company shall be US$200 million. f. Within 5 years after the accession Establishment of solely foreign-funded subsidiary companies shall be allowed (there shall be no restriction other than the establishment conditions and the restrictions on business scope). II. EXPLANATION OF SOME OF THE TERMS USED IN THE SCHEDULE OF SPECIFIC COMMITMENTS AND CONCESSIONS OF CHINA (1) BLANKET POLICY "Blanket policy" refers to the insurance policy covering the properties and responsibilities of a legal person at different places. A blanket policy may only be issued by the head office of an insurance company or the business department of a branch company at the provincial level authorized thereby. No other branch may issue the blanket policy. a. Blanket policy of which the subject matter of insurance is the key project of the state Where the subject matter of insurance is a key construction project of the state (namely one of the projects listed and promulgated by the State Development Planning Commission each year), and the investor meets one of the following requirements, the insurance institution of the place where the investing legal person is located may handle the insurance by blanket policy: 1. The investment for the subject matter of insurance all comes from China (including reinvestment by foreign-funded enterprises in China), and the investor's investment accounts to more than 15% of the total investment; 2. Some investment comes from abroad, and some comes from China (including reinvestment by foreign-funded enterprises in China), and the Chinese investor's investment accounts to more than 15% of the total domestic investment; or 3. Where all of the project's investment comes from abroad, every insurance company may handle the insurance by blanket policy. b. Blanket policy covering different subject matters of insurance of the same legal person If the subject matters of insurance located at different places and belonging to the same legal person (excluding financial, railway, and post industries and enterprises) meet any of the following conditions, a blanket policy may be issued. a. For the consideration of the payment of premium tax, an insurance company at the place where the legal person or accounting unit of the policy holder is located shall be allowed to issue the blanket policy; or b. Where more than 50% of the insured value of the subject matter of insurance comes from a large-or middle-scale city, then an insurance company located in that city may be allowed to issue the blanket policy, no matter whether the legal person or accounting unit of the policy holder is located in the city or not. Motor vehicle insurance, credit insurance, employer liability insurance, statutory insurance, and other insurance businesses excluded by CIRC may not be undertaken or reinsured by any other insurance company which is not in the place where the subject matter of insurance is located, or be covered by any blanket policy. (2) LARGE-SCALE COMMERCIAL INSURANCE "Large-scale commercial insurance" refers to insurance provided to any large-scale commercial enterprise that meets the following conditions: the annual premium paid by such an enterprise at the time when China enters the WTO exceeds RMB 800 thousand, and its investment tops RMB 200 million. One year after the WTO entry, the annual premium paid by the enterprise shall exceed RMB 600 thousand and its investment shall exceed RMB 180 million. Two years after the WTO entry, the annual premium paid by the enterprise shall exceed RMB 400 thousand and its investment shall exceed RMB150 million. (3) STATUTORY INSURANCE The statutory insurance mentioned in the schedule of specific commitments and concessions of China shall be limited to the following specific types, and will not be expanded to any other industry or product: automobile third party liability insurance, liability insurance for the drivers and operators of buses and other commercial vehicles. (4) ALTERATION OF THE RELEVANT DEFINITIONS Any alteration of the definition of "blanket policy" and "large scale commercial insurance" shall be consistent with the schedule of specific commitments and concessions of China and the obligations under CATS, thus to gradually open the market accession to these service sections. III. OTHER MATTERS (1) The qualification requirements for foreign insurance companies applying for permit to access to China's market shall not be applicable to the foreign insurance companies that have already been established in China and seek to set up branches or sub-branches. (2) Branches and sub-branches are the extension of the parent companies, and are not independent legal entities, and China will allow the establishment of branches on these grounds and in conformity with the schedule of specific commitments and concessions of China, including the provisions on most favored nation treatment. (3) With respect to the requirements on previous experience for establishment of commercial institution in insurance section, if the new entity continues to provide insurance services, then the merger, splitting, restructuring, or any other alteration of the legal form of an insurance company will not affect the requirements on previous experience included in the schedule of specific commitments and concessions of China. |
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