In November 2011, the Chinese Insurance Regulatory Commission (CIRC) published a short note on its website with respect to the implications of China's recent opening-up of its insurance industry. According to the note, fifty-five companies supported by foreign investment (with around 1,300 branches) have now been established in China. Foreign investment backed insurance companies are concentrated in the large cities of Shanghai, Beijing, Shenzhen and Guangzhou, with respective market share estimated at between 6 to 11 per cent.
In addition to introducing foreign investment into the Chinese insurance market, the CIRC has gradually applied its "going global" strategy for Chinese insurers wishing to enter the international insurance market. As at the end of November 2011, eight Chinese insurers had established legal entities overseas for the purpose of engaging in international business, with another six Chinese insurers setting up their overseas representative offices for the purpose of exploring offshore markets.
In 2000 the CIRC joined the International Association of Insurance Supervisors (IAIS) and later became a member of the executive committee in 2008, followed by the audit committee in 2010. These appointments greatly improved the CIRC's international influence in the global insurance market. In addition to its greater role in international supervision, the CIRC has signed up to a number of bilateral cooperation agreements with insurance regulators in a number of jurisdictions, including the United States of America, the United Kingdom, Hong Kong, and Japan. The CIRC has also established an insurance dialogue mechanism with insurance regulators in the US and the UK, with a particular focus on sharing supervisory information and developing the commercial pension insurance market. As a representative of a developing country, the CIRC has actively participated in drafting the Supervisory Framework for International Insurance Groups. This active involvement of the CIRC has largely mitigated the impact of the overhaul of the international supervisory rules upon China's insurance industry.
According to the note, the CIRC will continue its policy of opening up the Chinese insurance industry, focusing on attracting further foreign investment in the health and pension sectors as well as increasing the establishment of branches in the Mid-West of mainland China. However, given the existing international financial environment, the CIRC requires that all insurance companies regularly assess the risks resulting from the internationalisation of the insurance industry, particularly taking care to avoid unnecessary transfer of risk from foreign owners to their Chinese subsidiaries.
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