Licensing

• China has agreed to issue licenses solely on the basis of prudential criteria.  It will not use any economic needs test or quantitative limits on licensing.

• China’s services schedule provides that, to obtain a license, a foreign insurance company must meet the following qualifications:  (1) Over 30 years of experience operating in a WTO Member; (2) a representative office in China for over two years; and (3) total assets of at least $5 billion at the end of the year prior to application, with the exception of insurance brokers.  Insurance brokers must have total assets exceeding $500 million; this threshold falls to $400 million by December 11, 2002, to $300 million by December 11, 2003, and to $200 million by December 11, 2005.

• The above qualifications do not apply to foreign insurers already established in China that are seeking to establish branches or sub-branches.

• Internal branching for foreign insurers will be permitted consistent with the phase-out of geographic restrictions.

• Foreign life insurers may establish a joint venture with 50 percent foreign ownership and a Chinese partner of their choice.

• Foreign life insurers can provide services in Shanghai, Guangzhou, Dalian, Shenzhen and Foshan. By December 11, 2003, they may provide services in Beijing, Chengdu, Chongqing, Fuzhou, Suzhou, Xiamen, Ningbo, Shenyang, Wuhan and Tianjin. By December 11, 2004, geographic restrictions will be eliminated.

• Foreign insurers may provide individual (not group) insurance to foreigners and Chinese citizens. By December 11, 2004, they may also provide group, health and pension/annuities insurance to both foreign and domestic clients.

• Foreign non-life insurers may establish as a joint venture with 51 percent foreign ownership. They may also establish as a branch with 51 percent foreign ownership. By December 11, 2003, they will be permitted to establish as wholly-owned subsidiaries, with no establishment restrictions.

• Foreign non-life insurers can provide services in Shanghai, Guangzhou, Dalian, Shenzhen and Foshan. By December 11, 2003, they may provide services in Beijing, Chengdu, Chongqing, Fuzhou, Suzhou, Xiamen, Ningbo, Shenyang, Wuhan and Tianjin. By December 11, 2004, geographic restrictions will be eliminated.

• Foreign non-life insurers may provide “master policy” insurance and insurance of large-scale commercial risks, with no geographic restrictions.  Foreign non-life insurers may also provide insurance of enterprises outside of China and property insurance, related liability insurance and credit insurance of foreign-invested enterprises in China. By December 11, 2003, foreign non-life insurers may provide the full range of non-life services to both foreign and domestic clients.

• For brokerage of large-scale commercial risks, reinsurance, international marine, aviation, and transport insurance, foreign insurance brokers may establish a joint venture with 50 percent foreign ownership. By December 11, 2004, 51 percent foreign ownership will be allowed. By December 11, 2006, wholly foreign-owned subsidiaries may be established.

• Foreign insurance brokers can provide services in Shanghai, Guangzhou, Dalian, Shenzhen and Foshan. By December 11, 2003, they may provide services in Beijing, Chengdu, Chongqing, Fuzhou, Suzhou, Xiamen, Ningbo, Shenyang, Wuhan and Tianjin. By December 11, 2004, geographic restrictions will be eliminated.

• Foreign insurance brokers may provide “master policy” insurance no later than Chinese brokers, under conditions no less favorable.

• Foreign insurers may provide reinsurance services for life and non-life insurance as a branch, joint venture, or wholly-owned subsidiary without geographic, quantitative, or licensing restrictions.   

• Initially, a 20 percent cession of all lines of the primary risks for non-life, personal accident, and health insurance business with an appointed Chinese reinsurance company is required. The cession will be reduced to 15 percent after one year, 10 percent after two years, and 5 percent after three years.  No cession will be required after four years.

• Foreign insurance institutions may not engage in the statutory insurance business, i.e., third party auto liability insurance and driver and operator liability insurance for buses and other commercial vehicles.

• Managers, executives, and specialists of a representative office, branch, or subsidiary in China, temporarily moving as intra-corporate transferees, will be permitted an initial stay of three years.

• Managers, executives, and specialists of foreign-invested enterprises in China will be granted a long-term stay permit as stipulated in the terms of contracts concerned or an initial stay of three years, whichever is shorter.

• Service salespersons who are not based in China, and who meet certain other conditions set forth in China’s services schedule, are limited to a 90-day stay.

• There are no market access or national treatment restrictions on the cross-border supply of the following services:  (1) reinsurance; (2) international marine, aviation, and transport insurance; and (3) brokerage for large scale commercial risk, international marine, aviation, and transport insurance. China reserves the right to place market access and national treatment restrictions on the cross-border supply of other insurance services.

• The provision of life insurance, non-life insurance, and reinsurance services outside of China is not subject to market access restrictions and is accorded national treatment. 

• China reserves the right to place market access restrictions on the provision of brokerage services outside of China.

• The conditions of ownership, operation and scope of activities for an existing foreign service supplier, as set out in the supplier’s contract or shareholders’ agreement or in a license establishing or authorizing the supplier’s operation or supply of services, will not be made more restrictive than they were on December 11, 2001.