Close Close

Life Health > Life Insurance

New U.S.-China Trade Deal May Affect Life Insurers

Your article was successfully shared with the contacts you provided.

The new two-country trade agreement between the United States and China includes a provision that could help U.S. life insurers expand sales in China.

President Donald Trump signed the U.S.-China trade agreement at the White House Wednesday.


  • Links to the new U.S.-China trade agreement and a collection of Office of the U.S. Trade Representative fact sheets about the agreement are available here.
  • A White House fact sheet about the agreement is available here.
  • A Swiss Re report that includes data on the Chinese life market is available here.
  • The China Banking and Insurance Regulatory Commission website is available here.
  • A copy of a CBIRC statement about foreign-funded insurance companies is available here

Article 4.6 in the agreement relates to insurance services.

Today, many U.S., European and Japanese life insurers see China as a growth market. China now requires foreign life and health insurers that want to enter the market to form joint ventures with Chinese companies. The Chinese company in a life or health insurance joint venture must own at least 49% of the joint venture.

The new agreement calls for China to eliminate the foreign equity cap in the life, pension and health insurance sectors, and to let insurance companies wholly owned by U.S. companies to participate in these sectors.

“China affirms that there are no restrictions on the ability of U.S.-owned insurance companies established in China to wholly own insurance asset management companies in China,” according to the agreement text.

China also has agreed to eliminate any “business cope limitations, discriminatory regulatory processes and requirements, and overly burdensome licensing and operating requirements for all insurance sectors” by April 1, 2020, according to the text.

The United States, in turn, has acknowledged that Chinese financial institutions, such as the China Reinsurance Group, are asking for permission to enter the U.S. market.

The United States “affirms that such requests will be considered expeditiously,” according to the text.

The History

A number of non-Chinese life insurers once operated in China. That involvement came to an end in 1949, when the Communist Party took control over China.

American International Group Inc. began to court China in the 1970s. About 20 years ago, many non-Chinese insurers began entering the market through joint ventures.

Today, non-Chinese insurers see China as a hot growth market. The Million Dollar Round Table, for example, is an example of an organization for financial professionals that offers extensive programming in both Mandarin Chinese and in Cantonese. In 2018, 7,870 of MDRT’s members were from the United States, and 17,677 were from China, according to MDRT figures.

Analysts at a Swiss Re research arm reported in July that China accounted for the equivalent of about $313 billion in life and annuity premiums in 2018, and $262 billion in property and casualty premiums, or about 11% of 2018 premiums in both the life and health and the P&C sectors.

Life premiums in China grew an average of close to 15% per year from 2008 through 2017

“The launch of personal tax-deferred pension insurance, as well as China’s commitment to completely remove the cap on foreign ownership of Chinese life insurers in 2021, are favourable developments, but it will take time before the impact shows,” according to the Swiss Re analysts.

China regulates its insurance industry through an agency called the China Banking and Insurance Regulatory Commission. The CBIRC has a website that looks roughly like the website of the California Department of Insurance or the New York State Department of Financial Services.

CBIRC posted a notice in December stating that it would be eliminating the 51% cap on foreign ownership of joint-venture life companies. CBIRC said it would let a foreign company own 100% of a joint-venture life company starting Jan. 1.

— Read Health Care for All? China Has It But Needs More, on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on FacebookLinkedIn and Twitter.