China will accept applications early next year from foreign insurers seeking to take control of their local joint ventures and is even considering giving them full ownership earlier than flagged, reports Reuters citing people with direct knowledge of the matter said.
The regulator is expected to publish its final guidelines as soon as the first quarter of 2019 and would begin taking applications from interested foreign insurers soon after that, they said.
China has set an agenda to open up its financial sector and has already taken steps this year to relax foreign ownerships in securities ventures
Beijing said in November last year that for life insurance ventures it would first raise the foreign ownership cap to 51% from 50%. It has also pledged to remove the limit completely three years thereafter.
But there has been little clarity on the status of the sector's opening up, and doubts about Beijing's commitment has crept in amid an escalating Sino-US trade war and a regulatory overhaul.
The plans for the insurance sector, the world's third-largest insurance market, show the liberalisation plan has not been derailed.
"We have seen no signs of China looking to delay or put on hold its commitments to open up the financial sector despite the challenges on other fronts. If anything, they are looking to advance the process," said a top executive at a large foreign insurance company with a China presence.
The CBIRC is currently reviewing the feedback it received as part of a sector consultation process that ended recently, the people told Reuters.
The regulator, in a consultation paper issued earlier this year and seen by Reuters, has proposed, among other measures, that the major shareholder of a foreign-funded insurer not be allowed to sell the equity within five years of its acquisition.
It has not been smooth sailing for foreign insurers in China, despite a low market penetration of 3%. The total market share of foreign life insurers in China was just 6.97% last year, while the same was 1.96% for foreign property and casualty insurance companies, according to Guotai Junan Securities.
"For foreign life insurers, that's mainly caused by the conflicts between Chinese and foreign shareholders over management styles, and a slow buildup of branches," the brokerage said in a report in May.
While a one percentage point rise in the equity ownership would not have a big impact on the balance sheets of the global insurers, winning management control would help drive the business and facilitate decisions on expansion, industry sources said.
The regulator is likely to make it easier for foreign-owned joint ventures to expand into new provinces, moving away from its current practice of rationing of new branch opening applications, the people said.