On 13 December 2011, the eighth supplement (Supplement VIII) to the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and Mainland China was signed, marking the latest enhancement of economic and trade cooperation between Hong Kong and the Mainland. The insurance industry benefited as being one of the areas targeted by the Supplement which is to be implemented with effect from 1 April 2012.
Pursuant to the Supplement, and provided they fulfill the requirements set out in the Supplement, Hong Kong insurance broker companies will be allowed on a pilot basis to set up and operate insurance broking businesses through wholly-owned companies incorporated in Guangdong Province (including Shenzhen).In order to be able to carry on an insurance broking business in Guangdong Province pursuant to the Supplement, the insurance broker company must have:
- at least 10 years of experience in operating insurance broking business in Hong Kong;
- average annual turnover over the past three years and total assets of not less than HK$500,000 (US$64,000);
- no serious misconduct or record of delinquency action within the past three years; and
- set up a Mainland representative office for more than a year.
The latest market access liberalizations are welcomed by Hong Kong's insurance industry. However, the insurance industry would next like to see liberalization to the requirements governing access to the Mainland market by insurance companies themselves. Under the current requirements, which have remained unchanged since the first liberalizations under CEPA were implemented in January 2004, insurance companies are only allowed to enter the Mainland insurance market provided they have total assets of more than HK$5 billion, more than 30 years' relevant insurance experience and set up a Mainland representative office for more than 2 years.