China Getting Set To Open Its Doors To Foreign Reinsurers
Entry into the Chinese reinsurance market has not been easy, given the dominance of the Beijing-based China Reinsurance Company, which is the only reinsurer directly controlled by the State Council, hence a government monopoly.
But China Re is about to lose its monopoly status, with the governments recent move to grant licenses to Munich Re and Swiss Re, while other foreign reinsurers are waiting in the wings to enter the China marketplace.
Market sources indicated that foreign reinsurers exploring business possibilities in China include GE Reinsurance, Chubb Re and Gerling Global Re. In addition, GE ERC has recently applied with the China Insurance Regulatory Commission for a license to operate in the property and casualty direct business, which is seen by the market as a stepping stone that will pave the way for the entry of GE Reinsurance.
The two Europe-based reinsurers–Munich Re and Swiss Re–have been licensed to set up just one branch each.
The first to obtain a license was Munich Re, which did so last March, but it has not yet opened up a branch. The China Insurance Regulatory Commission has now granted a license to Swiss Re. CIRC has said Swiss Re may set up a branch to develop both property and casualty and life reinsurance business in China.
Swiss Re has not yet decided which city, Beijing and Shanghai, should be the venue of the only branch it has been allowed to set up because both cities are important markets, said Eric Gao, chief representative of the firms office in Beijing.
The licenses granted to reinsurers are calculated to make life comfortable for the dozen or so foreign firms that are operating in the direct insurance market in both life and non-life businesses, and to encourage more to join the bandwagon, sources say.
It is also part of Chinas effort to implement the promises on market liberalization that it made as a condition of membership of the World Trade Organization.
“The CIRC will finalize this year a set of detailed implementation methods for each commitment made [to the WTO] about the insurance sector opening and see to it that they are carried out,” CIRC Chairman Ma Yongwei announced at a conference on insurance held in Beijing recently.