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Contents on Insurance Industry in the Legal Documents of China's Accession to the WTO I. TIME SCHEDULE OF COMMITMENTS (1) Life Insurance 1. At the time of accession Foreign life insurance companies are allowed to establish joint venture companies in Shanghai, Guangzhou, Dalian, Shenzhen and Foshan, the proportion of foreign investments shall not exceed 50%, and the foreign parties may freely choose their partners to the joint venture. 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 quantity restrictions on the permits, and 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 year-end assets of the company for the year before the application is filed shall be no less than USD 5 billion. 2. Within two years after accession The opened area is expanded to Beijing, Chengdu, Chongqing, Fuzhou, Suzhou, Xiamen, Ningbo, Shenyang, Wuhan and Tianjin. 3. Within three years after accession The geographical restrictions shall be cancelled, joint venture 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 investments of not more than 50%, and those on the conditions for establishment). (2) Non-life insurance 1. At the time of accession Foreign non-life insurance companies shall be allowed to engage in international shipping, aviation, and transport insurance business. Foreign non-life insurance companies shall be allowed to establish branch companies or joint venture companies in Shanghai, Guangzhou, Dalian, Shenzhen, and Foshan, and the proportion of foreign investments may reach 51%. The aforesaid companies shall be allowed to undertake "master policy" insurance 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 quantity restrictions on the permits, and the conditions for establishment are completely the same as those of life insurance companies. 2. Within two years after the accession Foreign non-life insurance companies are allowed to establish wholly foreign-owned subsidiary companies. The opened 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-round non-life insurance services to foreign and Chinese customers. 3. Within three years after accession The geographical restrictions shall be cancelled, (there shall be no restriction other than the conditions for establishment). (3) Reinsurance and Statutory Secondary Insurance 1. At the time of accession Foreign insurance companies shall be allowed to engage in reinsurance business across the border. Foreign insurance companies shall be allowed to provide reinsurance for life insurance and non-life insurance in the form of branch company, company or wholly foreign-owned subsidiary company, and there shall be no geographical restrictions or quantity restrictions on the business permits issued. The issuance of business permits shall not be subject to economic demand tests or quantity restrictions on the permits, and the conditions for establishment are completely the same as those of life insurance companies (there shall be no restrictions other than the conditions for establishment). Wholly foreign-owned insurance companies are not allowed to operate statutory reinsurance business. At the time of accession, a foreign insurance company must undertake 20% of secondary insurance of all of its basic risk business of non-life insurance, individual accident and health insurance with a designated reinsurance company of China. 2. Within one year after the accession The secondary insurance proportion shall be 15%. 3. Within two years after accession The secondary insurance proportion shall be 10%. 4. Within three years after accession The secondary insurance proportion shall be 5%. 5. Within four years after accession The compulsory secondary insurance shall be cancelled. (IV) Insurance Brokerage 1. At the time of accession Foreign insurance brokerage companies shall be allowed to engage in large-scale commercial insurance brokerage, international shipping, aviation, and transport insurance brokerage and reinsurance brokerage business across the border. Foreign insurance brokerage companies shall be allowed to establish joint venture 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; and meanwhile, those companies shall be allowed to provide "master policy" brokerage services on the basis of national treatment. The issuance of business permits shall not be subject to economic demand tests or quantity restrictions on the permits, a minimum year-end total asset value of USD 500 million is required for the application for establishing a company, and the remaining conditions shall be the same as those for life insurance companies. 2. Within one year after accession The minimum total year-end assets required for application for establishing a company shall be USD 400 million. 3. Within two years after accession The minimum total year-end assets required for application for establishing a company shall be USD 300 million. 4. Within three years after accession The geographical restrictions shall be cancelled, and the proportion of foreign investments may not exceed 51%. 5. Within four years after accession The minimum total year-end assets required for application for establishing a company shall be USD 200 million. 6. Within five years after the accession Establishment of wholly foreign-owned subsidiary companies shall be allowed (there shall be no restriction other than the conditions for establishment and the restrictions on business scope). II. INTERPRETATIONS OF SOME TERMS USED IN THE SCHEDULE OF CONCESSIONS OF SPECIFIC COMMITMENTS OF CHINA (I) Master Policy A "master policy" is a policy that provides blanket coverage for the same legal person's property and liabilities located in different places. A master 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 by it. No other branch may issue the master policy. 1. Master policy business of which the insurance subject matter is a key project of the state Where the insurance subject matter 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 at the place where the investing legal person is located may handle the business by master policy. (1) All the investments for the insurance subject matter come from China (including reinvestments by foreign-funded enterprises in China), and the investor's investment account occupies more than 15% of the total investment amount. (2) Some investments come from abroad, and some come from China (including reinvestments by foreign-funded enterprises in China), and the Chinese investor's investment account occupies more than 15% of the total amount of domestic investments. (3) Where all of the project's investments come from abroad, each insurance company may handle the business by way of master policy. 2. Master policy covering different insurance subject matters of the same legal person. If the insurance subject matters 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 master policy may be issued. (1) For the consideration of the payment of premium tax, an insurance company at the place where the legal person or accounting entity of the policy holder is located shall be allowed to issue a master policy. (2) Where more than 50% of the insured value of the insurance subject matter comes from a large-or medium-scale city, then an insurance company located in that city may be allowed to issue a master policy, disregard whether the legal person or accounting entity of the policy holder is located in the city or not. Motor vehicle insurance, credit insurance, employer liability insurance, statutory insurance, and other insurance business excluded by China Insurance Regulatory Commission may not be undertaken or reinsured by any other insurance company which is not in the place where the insurance subject matter is located, or be covered by any master policy. (II) 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 of China's accession to the WTO exceeds RMB 800 thousand, and its investment amount exceeds RMB 200 million; one year after China's accession to the WTO, the annual premium paid by the enterprise exceeds RMB 600 thousand and its investment amount exceeds RMB 180 million; two years after China's accession to the WTO, the annual premium paid by the enterprise exceeds RMB 400 thousand and its investment amount exceeds RMB 150 million. (III) Statutory Insurance The statutory insurance mentioned in the schedule of concessions of specific commitments 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. (IV) Alteration of the relevant definitions Any alteration of the definition of "master policy" and "large-scale commercial insurance" shall be consistent with the schedule of concessions of specific commitments of China and the obligations under CATS, thus to gradually open the market accession to these service sectors. 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 this basis and in conformity with the schedule of concessions of specific commitments of China, including the provisions on most favored nation treatment. (3) With respect to the requirements on previous experiences for the establishment of commercial institutions in the insurance sector, if the new entity continues to provide insurance services, then the merger, division, restructuring, or any other alteration of the legal form of an insurance company will not affect the requirements on previous experiences included in the schedule of concessions of specific commitments of China. |
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