China proposes new rules on foreign insurers' business growth - scholar
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Date-Time: 2003-8-1 15:46:30 BEIJING (XFN) - China has proposed detailed new rules on capital requirements for foreign insurance companies hoping to open business outlets in China, a professor with the Central University of Finance and Economics said. "The move will make it more expensive for foreign insurers to expand in China, but may also cut regulatory uncertainties for foreign insurers," Hao Yansu, an insurance professor with the school, told XFN. The China Insurance Regulatory Commission has drafted regulations on the management of foreign-funded insurance companies and is soliciting public opinions. According to the proposed rules, foreign insurer subsidiaries in China must have a minimum of 200 mln yuan in registered capital, a figure which must be increased by 20 mln yuan with the opening of each branch until the total amount reaches 500 mln yuan. Current foreign insurance regulations do not mandate minimum capital requirements before opening new branches. Hao said the proposed rules are actually "raising the minimum capital threshold" for foreign insurers' expansion in China, thus limiting entry to large-cap companies. But Hao added the new regulations would hopefully make the supervision climate more favorable for foreign insurers. "China is gradually lifting geographical and business restrictions for foreign insurance companies in accordance with its WTO entry promises, and the proposed capital requirements are relatively low compared to most other markets," he said. Hao added the proposed capital requirements for foreign insurers are no higher than requirements for domestic insurers. According to current Chinese rules, the minimum capital requirement for a nationwide insurance license is 500 mln yuan and the requirement for a regional license is 200 mln yuan. A total of 36 foreign insurers companies have entered the Chinese market to date, opening a total of 57 business outlets. xin.zhou@xfn.com
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