Insurance Working Group Submits Comments on Draft Legislation Go back »

2006-03-09 | Beijing

Insurance Working Group Submits Comments on draft modification of the " Rep Offices Rules" 


On 9th March the European Chamber submitted comments on the draft modification of the "Rules on Administration of Representative Offices of Foreign Insurance Institutions" on behalf of the Insurance Working Group. The draft legislation is available on Chinese on the CIRC website.

Please find a summary of the comments below:

The Insurance Working Group share the common objective with CIRC and other Chinese authorities of developing a stable, efficient and healthy insurance industry. However, the new draft modifications of the Rep Office Rules issued by the CIRC would impose substantial restrictions on European insurers active in China without increasing accountability of Chief Representatives. The European Chamber therefore urges the CIRC to re-examine the below points and to take the following suggestions into consideration:

1. Point 10:Article 21 of Rep Office Rules requires the General Representative or the Chief Representative to be stationed at the representative office for daily work, and the cumulative number of days spent at (the city of) the representative office should not be less than 300).The proposed changes would impose substantial limitations on the freedom of movement of the Chief Representative of foreign insurance companies; furthermore we do not see how this requirement would increase the accountability of Chief Representatives. We are confident that these are other ways of control that would not impose restrictions on the freedom of movement of insurance company staff.
Recommendation: maintain Article 21 without any modifications.

2. Point 11:It is unclear whether the modification will mean that foreign insurance companies in the future will no longer require CIRC approval before closing a representative office. If this is the case, will the modification be implemented in coordination with SAIC, to ensure that SAIC will process the application without official documents from CIRC.
Recommendation: Clarify whether SAIC will process representative office closure applications without official documents from CIRC.

3. Point 1(b): Requiring 20 years insurance experience for setting up a representative office is a too stringent condition. Meeting CIRC's prudential requirements and having a clean legal record for the previous 3 years should be sufficient to guarantee the reliability of an insurance company. Furthermore the requirement is not in line with the spirit of WTO.
Recommendation: Remove Point 1(b)

4. Point 5 and 7:The proposed changes will impose different rules for naming general and simple representative offices. Only general representative offices will be allowed to use China in their company name, while simple representative offices have to use the city they are based in their company name (that is company name China vs., company name City of rep office?.This requirement is not representative of the wider business activities of many foreign insurance companies, whose activities extend beyond the geographical area covered under the city name. It is also damaging to an insurance provider's image as it under-represents the depth of their China business activities.
Recommendation: Allow companies who operate as a simple representative office to operate under the title China Representative Office.