According to CIRC's Vice Chairman, Chen Wenhui (in comments posted on the CIRC website), the regulator will improve market entry policies for foreign insurance firms that have yet to enter the China market. Chen believes this will be beneficial to the Chinese insurance industry from both a client interest and risk protection perspective.
Chen also stated that the Chinese authorities will further step up reform of the insurance market - for example, by allowing foreign insurers to participate in the pension business - in order to attract quality insurers.
The regulatory and market environment will also be improved to encourage existing foreign insurers in China to diversify their businesses into different sectors, such as casualty, retirement, and healthcare insurance, he added. Foreign insurers currently operating in China are mainly involved in the life insurance business.
Today, there are around 57 foreign-fund insurance companies from 16 countries operating in China, running more than 1,800 branches and offices across the country. However, investment into the market and general engagement in China by foreign insurers has been small.
Chen states that foreign insurers should be confident of their growth and should be willing to adjust their business strategies and management styles, to play a role in risk protection and long-term saving.
Undoubtedly, the CIRC's pledge to further open up China's key insurance markets to foreign investment is good news for multinational insurers seeking to further tap into China's vast market. However, the regulation of China's insurance markets remains challenging and can be a minefield of ever-changing regulations for foreign insurers to navigate. This was highlighted by the action of the regulator earlier this year to impose tighter rules on investments which forced foreign insurance companies to be even more prudent in relation to their operations in China.
Regardless, many industry observers and key players perceive China’s insurance industry as being in a strong period of growth, and the CIRC's invitation for investment into the local market should ensure that China remains open for business to the outside world.