CIRC Bans Insurers Drawing Paid-in Capital Before Opening

China Insurance Regulatory Commission on Tuesday released a guidance to acceptance of insurance companies, which prevents insurers from drawing paid-in capital before receiving regulatory approval to start business.

CIRC asks the registered capital of an insurer should be minimum CNY 200 million and must be paid-in capital. Investors of insurer should deposit the paid-in capital with reputable commercial banks and cannot draw the capital before starting business with approval.

An insurer shall have feasible business plan in line with industry planning and regulatory requirement as well as defines its market position, operational area and strategy.

Applications for starting business must include business development plan in coming three years, proposed insurance products, outlet expansion plan, marketing plan, reinsurance plan, profitability and solvency forecast and medium- and long-term asset allocation plan. These plans shall accord with its capital status and continuous investment capability of shareholders.

If an investor of insurer is overseas financial institution or will become majority shareholder with over 15% stake or less than 15% stake while directly or indirectly controlling the insurer's shareholder, it shall submit audited financial reports in recent three years to CIRC.

The guidance is applicable to Chinese insurers that have less than 25% foreign ownership and will take effect from July 1. The acceptance of insurance group companies, foreign insurers and insurance asset management companies shall refer to the guidance.