Confusion over insurance opening in US-China deal

  • Economy
  • Friday, 17 Jan 2020

BEIJING: A trade pact opening up China’s insurance sector to US firms has caused confusion among lawyers in the Asian nation.

China pledged to remove the foreign-equity cap for the life, pension and health-coverage sectors no later than April 1, according to the text of a broad trade agreement announced Wednesday. However, lawyers in China say they thought the limit had already been lifted on Jan 1.

The confusion stems from life insurance in China being colloquially used to cover a host of areas including health and disability, distinct only from non-life coverage of things such as property and automobiles. Local companies offer specialised cover for life, health and pension through separate units.

China has said it lifted foreign ownership restrictions on “life insurers” at the beginning of the year, which was understood by many to indicate it was removing limits for all three sectors. It’s unclear why health insurance and pensions were introduced separately in the trade deal, according to lawyers who spoke with Bloomberg and didn’t want to be identified discussing a government decision.

China’s insurance and banking regulator didn’t immediately respond to a request for comment.

Whether January or April, the import remains the same. Foreign firms will soon be able to make an aggressive bid to wrest business from dominant local players including China Life Insurance Co and Ping An Insurance (Group) Co.

Chubb Ltd, which is based in Zurich but has a large US presence, could be among the first insurers to benefit after building a presence in China. In November, the company agreed to lift its stake in Huatai Insurance Group Co to 46.2%. The insurer was aiming for “majority and beyond ownership in Huatai”, CEO Evan Greenberg said at the time. — Bloomberg

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