A U.S. industry group called on China on Tuesday to streamline licensing requirements for foreign-invested life insurers seeking to expand their operations and to do away with restrictions on foreign ownership.
China has removed geographical restrictions on foreign-invested insurers as part of its World Trade Organization (WTO) commitments, but it has a separate licensing process for them and domestic firms.
Frank Keating, president of the American Council of Life Insurers (ACLI), said the differential treatment, whereby domestic firms could concurrently receive approval to open a number of new locations but foreigners had to seek approval in succession, was creating an uneven playing field.
The delay and the bureaucracy harm the Chinese people, because the more competition you have among and between Chinese and foreign companies, the lower the cost, the more availability of product, and the safer the products, Keating told a news briefing in Beijing.
Brad Smith, ACLI's vice president for international relations, said the group was also pressing China to do away with restrictions on the percentage stake foreign insurers could hold in a Chinese life insurer, currently set at 50 percent.
That's obviously a major objective going forward, our member companies would hope to be able to own 100 percent of a Chinese insurance company, Smith said.
Smith added that the group was pushing Beijing to apply requirements on the minimum asset base needed by an insurer to be able to invest abroad, currently set at 5 billion yuan ($631 million), in a way that better reflected the overall strength of foreign firms with operations in China.
That requirement was keeping most foreign insurers from investing overseas, given that the asset requirement applied to their local joint ventures, Smith said.
The U.S. companies operating in China are not just in China, they're global companies, and they have hundreds of billions of dollars in global assets, he said.
We would respectfully request that those global assets be counted toward the asset threshold.
Keating also said that in meetings with Chinese insurance regulatory officials, he had raised the issue of allowing insurers to offer a wider range of products and to invest in more asset classes.
Life insurance premiums in China rose 14.2 percent in 2005 to 365 billion yuan.