Foreign insurers participating in domestic market


The Chinese insurance market is continuing to grow unabated. While structural changes have seen a drop in infrastructure investment and the corresponding high levels of gross domestic product (GDP), the services sectors – in particular, the finance sector – are experiencing significant growth.

China's shift towards a knowledge-based digital economy is fuelling growth in not only the IT, pharmaceutical and banking sectors, but also the insurance sector.(1) This growth aligns with the government's plan to double the rate of 'insurance penetration' (ie, insurance premiums as a percentage of GDP) from its previous level of approximately 2.4% to 5% by 2020.(2) By this date, insurance premium income is expected to have reached Rmb4.5 trillion, with total industry assets of Rmb25 trillion. If this aim is achieved, China will have usurped the United States to become the world's largest insurance market (for further details please see "Presidential summit postulates rise of insurance investment ceiling").

This goal may not be unrealistic for a number of reasons, including the fact that the penetration rate in more fully developed insurance markets worldwide is closer to 7.5%.(3) For example, in the neighbouring Hong Kong market, the rate is as high as 13.4%.(4) Given that the domestic insurance market is fuelled in part by China's growing private financial wealth (at a rate of $4 trillion a year) and appears destined to benefit from the rise of insurtech,(5) this aim appears to be realistic.

Foreign insurers participating in domestic market

This bodes well for overseas insurers looking to participate in the domestic market. In its continuing reform programme for the insurance industry, the State Council has stated that its plans include "raising its level of liberalization and promoting the insurance market to further open [it up] to both domestic and foreign players… [and] achieve the better integration of 'attracting foreign investment'".(6) While the market remains mostly dominated by local insurers, such as Ping An, the People's Insurance Company of China and China Life, a number of overseas insurers are vying for a greater market share. Generali, MetLife and Prudential are examples of overseas companies that are operating joint ventures in mainland China with Chinese companies, with the latter – through its tie up with CITIC – increasing its Chinese insurance income by 185% to £53 million for the first half of 2017 on a year-on-year basis.(7) Although this sum forms a relatively small proportion of CITIC's overall income, increased demand for the provision of insurance and continuing structural reform provide a healthy backdrop for overseas insurers looking to capitalise on growth in China.

However, foreign-backed collaborations should be prepared to align their business objectives with the government's policy-driven goals. This would be a wise and practical strategy for foreign insurers in the Chinese market. Actions are being taken to revive party representative committees serving within the internal corporate structure of sino-foreign joint ventures with state-owned Chinese companies. By collecting information, monitoring behaviour and reviewing significant company decisions, these committees – along with investment, labour, audit and development committees – may have a hand in ensuring that an insurer's social responsibilities are reflected in its development.(8)

Likewise, the China Insurance Regulatory Commission (CIRC) recently tightened its net on sales of short-term, high-yielding investment products that, in its opinion, "deviate from the fundamental origin of insurance".(9) This heralds a return to the fundamental business of insurance as a means of protection against financial loss. The protection of the interests of the applicant, the insured and the beneficiary is a basic doctrine of Chinese insurance law. The CIRC has abided by the principles of the Communist Party of China Central Committee and the State Council in pronouncing that the industry's focus should be the "security nature of insurance" and releasing a series of policies intended to promote further development in this area.


In light of the above, foreign participants should remain cognisant of the fact that, while the Chinese insurance market may offer unprecedented opportunities for profit and growth, their business strategies should align with China's economic and social development needs. How best to grasp this opportunity and adopt the right strategy with regard to business development in this growing and dynamic market, as well as discern the nature and phase of development of the Chinese insurance industry, are essential considerations for foreign participants – especially those entering the market for the first time.

For further information on this topic please contact Hao Zhan or Sharif Hendry at AnJie Law Firm by telephone (+86 10 8567 5988) or email ([email protected] or [email protected]). The AnJie Law Firm website can be accessed at‚Äč


(1) Further information is available here.

(2) Several Opinions of the State Council on Accelerating the Development of the Modern Insurance Service Industry, GuoFa [2014] 29, October 8 2014.

(3) Further information is available here.

(4) As at 2015. Further information is available here.

(5) Further information is available here.

(6) Several Opinions of the State Council on Accelerating the Development of the Modern Insurance Service Industry.

(7) Further information is available here.

(8) Further information is available here.

(9) Further information is available here.