life insurance industry is set to increase thanks to an
accommodating stance being taken by the China Insurance Regulatory
Authority (CIRC) towards insurance sales via banks and,
potentially, investment by banks in insurers.
In the latest development China’s official news agency Xinhua
reports that the CIRC has granted permission to the state-owned
Bank of China and private sector bank China Minsheng Banking Corp
to commence insurance sales.
The CIRC’s move bring to six the number of banks selling insurance
in China. Of the other four, two are domestic banks: China’s
largest state-owned bank, Industrial and Commercial Bank of China
(ICBC); and publicly listed China Construction Bank (CBC), in which
Bank of America has a 10.75 percent stake.
The other two banks are Hong Kong-based Hangseng Bank in which HSBC
has a 52 percent stake and Bank of East Asia, Hong Kong’s largest
Already a major factor in China’s life insurance industry, sales
via the bancassurance channel increased by 153 percent in the first
half of 2008 and accounted for more than half of total life
insurance sales of CNY431.86 billion ($63 billion), according to
Xinhua. The latter figure represented an increase of 64 percent
compared with the first half of 2007.
Given their importance in the insurance industry it is not
surprising than banks are lobbying for regulatory change that would
enable them to invest in insurers.
In a notable move in this direction the CIRC has confirmed that it
has received applications from four domestic banks to buy stakes in
insurers. The banks are ICBC, CBC, Bank of Communications, in which
HSBC owns a 19.9 percent stake, and Bank of Beijing, in which
Netherlands bancassurer ING holds a 19.9 percent stake.