The head of the China Insurance Regulatory Commission has encouraged domestic insurance companies to “establish modern corporate systems” so that they are better able to face competition from foreign companies following China’s entry to the World Trade Organisation. Ma Yongwei said that state insurance companies should sell their stakes to foreign firms, form joint ventures or list on the stock market to improve competitiveness.
In December Bank of China became the first mainland bank to enter the country’s insurance market. It opened a branch in Shenzhen through its Hong Kong-incorporated unit, Bank of China Group Insurance. While strict barriers exist between banking, insurance and securities markets, other Chinese banks are also expected to look for ways to diversify their activities.
The People’s Insurance Company of China told China Daily that it would become a financial holding company in which foreign companies would be allowed to take minority stakes. The restructuring is likely to take two to three years to carry out.