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.
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.