Commercial banks in China's financial hub Shanghai do not accept the lowered bancassurance commission standard of Shanghai Insurance Association.

According to the Self-Discipline Commitment of Bancassurance Commission Standard of Shanghai, the bancassurance commissions have been lowered by 50%, which is unacceptable to commercial banks who act as the agent selling insurance products. On the one hand, banks could not fulfill the sales goal of intermediary financial products once they accept the lower bancassurance commission standard. On the other hand, insurers would achieve poor performance if they ask those unwilling lenders to stop selling some insurance products.

Actually, some of Shanghai-based foreign life insurance companies have suggested that both foreign and Chinese banks should get higher commissions from the sales of upscale wealth management bancassurance products.

In the first half of this year, life insurers in Shanghai realized premium revenues of CNY 27 billion, an increase of CNY 309 million compared with the same period of the previous year. The bancassurance channel contributed 44.71% to total premium revenues in Shanghai's life insurance market in the first half year.

The Shanghai Bureau of China Insurance Regulatory Commission earlier required adjustment of business structure in local life insurance market. Meantime, Shanghai-based life insurers are expected become customer demand oriented by selecting most suitable products for different groups of customers.

According to the insurance industry regulator, the bancassurance premiums in the country hit CNY 165.4 billion in the first half of this year, down 4.5% year on year.

Ping An Insurance (Group) Company of China, Ltd. (601318.SH), based in the southern boomtown Shenzhen, achieved bancassurance premiums of CNY 16.3 billion in the first six months of this year, rising 137.7% compared to the same period of 2008, according to the interim report of the group. After Ping An successfully acquires Shenzhen Development Bank (000001.SZ), the former is to have a much bigger platform for it to boost the bancassurance business, said market observers.

The Beijing branch of China Pacific Life Insurance Co. realized premium revenues of CNY 780 million from the single-premium bancassurance business in the six months ended June 30, 2009, down 50% year on year; and the branch achieved CNY 155 million premiums from the regular-premium bancassurance business, an increase of 400%. The Beijing branch of China Life Insurance Co. (601628.SH, 2628.HK) gained CNY 86.36 million premium revenues from the regular-premium bancassurance business, up CNY 50 million versus the same period of last year.