What Do Insurance Licenses Mean for Internet Healthcare? (Part II): How Difficult Is It to Obtain a Life Insurance License?

This article continues from:What Do Insurance Licenses Mean for Internet Healthcare? (I) How Valuable Is the Insurance Brokerage License?

Part II: How Difficult Is It to Apply for a Life Insurance License?

Under China’s Insurance Law, insurance business activities are categorized into property insurance and personal insurance. Property insurance includes property loss insurance, liability insurance, credit insurance, and other related lines; personal insurance comprises life insurance, health insurance, and accident injury insurance. Therefore, the health insurance segment relevant to internet healthcare falls within the scope of personal insurance operations. Entities engaged in personal insurance business are commonly referred to as life insurance companies, or “life insurers” for short. However, it is important to note that property and casualty (P&C) insurers are permitted to underwrite short-term health insurance products. For example, ZhongAn Insurance holds a P&C license, which restricts its health insurance offerings to short-term products.

There are currently 75 life insurance license holders in China; how many of them are not owned by the powerful and privileged?

Compared with property insurance, life insurance involves long-term underwriting periods and critical matters such as the policyholder’s life safety and health care. Consequently, there are naturally higher requirements for the operational credibility and capabilities of life insurance companies, leading to even more stringent scrutiny in the approval of life insurance licenses. In 2003, Minsheng Life Insurance became China’s first national life insurance company with private capital as the main investment entity to receive approval. However, its initial preparatory work began in late 1994, taking nearly ten years before it could officially commence operations. Of course, more than a decade has passed since 2003, and the current landscape is vastly different.

According to the official data released by the China Insurance Regulatory Commission (CIRC), there are currently 75 life insurance companies in China that hold life insurance licenses, including 47 domestic insurers and 28 foreign-funded insurers, as shown in the table below:



The Big Five Banks Converge on Life Insurance

On January 16, 2008, the China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission (CIRC) signed a Memorandum of Understanding on Cross-Sector Regulatory Cooperation, permitting commercial banks and insurance companies to conduct pilot programs for mutual investment, provided they complied with relevant national regulations and effectively isolated risks, and adhered to market-oriented principles as well as equality and mutual benefit. Consequently, major banks rushed to acquire insurance licenses by taking equity stakes in or gaining controlling interests in insurance companies.

It is reported that among the five major state-owned commercial banks, Bank of Communications was the first to obtain an insurance license. In late 2009, Bank of Communications successfully acquired a stake in Zhongbao Kanglian Life Insurance (now BOCOM Life Insurance). Subsequently, in 2010, Industrial and Commercial Bank of China (ICBC) purchased a 60% equity interest in Axa Golden Life Insurance (now ICBC-AXA Life Insurance) for RMB 1.2 billion. In July 2011, China Construction Bank (CCB), together with its co-investors, formally completed the transfer and closing procedures for the 51% equity stake in Pacific Annuity Life Insurance held by China Pacific Insurance Group, thereby becoming the controlling shareholder of Pacific Annuity Life Insurance (now CCB Life Insurance). On August 31, 2015, Wang Hongzhang, Chairman of CCB, announced that the CCB Pension Company under preparation would be established as early as September, marking CCB’s formal entry into the domestic pension market. Agricultural Bank of China received approval in November 2012 to take a controlling stake in Jiahe Life Insurance (now ABC Life Insurance).

On August 25, 2015, Bank of China announced that its wholly-owned subsidiary, BOC Insurance, had acquired a 51% equity stake in AVIC-CBC Life Insurance for RMB 1.275 billion through a capital increase, thereby becoming its controlling shareholder. The company was subsequently renamed BOC-CBC Life Insurance, making Bank of China the last among the major Chinese banks to secure a life insurance license and marking the entry of all five large state-owned commercial banks into the life insurance sector.

Apart from BOC-Samsung Life Insurance, an examination of the other four bank-controlled life insurance companies reveals that prior to China Construction Bank’s entry, Jianxin Life Insurance had a premium scale of only over RMB 1 billion. However, by the end of 2014, its premiums had reached RMB 16 billion, representing a 14-fold increase over four years. In the first seven months of this year, Jianxin Life’s total premiums amounted to RMB 28 billion. Agricultural Bank of China Life Insurance recorded total premiums of RMB 13.2 billion in the first seven months of this year, a year-on-year increase of 82.56%. ICBC-AXA Life Insurance achieved total premiums of RMB 15.6 billion, up 92.4% year on year. Bank of Communications-Concord Life Insurance reported premium income of RMB 3.3 billion.

All are well-known enterprises, with some rejoicing and others lamenting.

In December 2012, Fosun Pramerica Life Insurance Co., Ltd., jointly established by Fosun Group, controlled by Guo Guangchang, and Prudential Financial of the United States, officially commenced operations. As a joint venture with Prudential Financial, one of the largest financial institutions globally, it became the first approved joint-venture life insurance company in China. This milestone broke the longstanding convention that foreign entrants into the Chinese market must partner with large state-owned enterprises, making it the first domestic private-foreign joint-venture insurance company.

On August 25, 2015, it was reported that Oceanwide Holdings was exploring the possibility of entering the life insurance business. If all goes well, Oceanwide Holdings will hold three insurance licenses: property and casualty insurance, life insurance, and reinsurance.

If Oceanwide Holdings is a formidable player poised to make bold inroads into the life insurance sector, then China Huadian Corporation represents state-owned enterprises that have sought but failed to secure a foothold, leaving them disheartened. On September 21, 2015, Huadian attempted various strategies to gain controlling stakes in a life insurer, such as establishing Huacheng Life Insurance and acquiring Allianz-China Life Insurance; however, these efforts ultimately fell short at the final stage due to various reasons. It was stated that Huadian would temporarily refrain from pursuing ventures in the life insurance industry for the foreseeable future. Similarly, the well-known private enterprise Suning Appliance also failed to obtain an insurance license. Subsequently, Suning shifted its focus to applying for an insurance agency license, which it successfully acquired in February 2014.

Reported Three Major Reasons for Rejection of Insurance License Applications: First, unclear intent for establishment; second, investors are generally private capital with weak sustained funding capabilities, and some shareholders fail to meet financial criteria; third, proposed senior executives do not meet qualification requirements.


In 2015, only one out of 51 applicants for life insurance licenses was approved.

According to publicly available statistical data from November 2015, a total of 51 life insurance companies were in the application process or being initiated by various investors during the first ten months of the year. Although numerous institutions sought insurance licenses, obtaining them proved difficult, leaving nearly 90% of these enterprises still waiting in line. Statistics compiled by Securities Daily from the China Insurance Regulatory Commission (CIRC) website revealed that, since the beginning of the year, approvals for preparatory establishment had been granted to 12 insurance companies. Among these, only one was a life insurer, while eight were property and casualty insurers, two were asset management companies, and one was a pension insurance company.



The only life insurance company to receive approval for preparatory establishment was China United Life Insurance Company, a process that proved particularly protracted. On January 28, 2015, China United Holdings finally obtained the life insurance license for China United Life Insurance. According to the official website of the China Insurance Regulatory Commission (CIRC), the registered capital of this life insurer was RMB 1.5 billion, with shareholders being China United Holdings and its subsidiary, China United Property Insurance. Established in July 1986, China United Insurance originated from the Xinjiang Production and Construction Corps Insurance Company, which was founded with special appropriations from the Ministry of Finance and the Ministry of Agriculture and organized by the Xinjiang Production and Construction Corps. It was the second state-owned sole-proprietorship insurance company in China to possess independent legal person status.

In April 2015, New China Zhuoyue Pension Insurance Co., Ltd. received approval from the China Insurance Regulatory Commission (CIRC) to be jointly established by New China Life Insurance Co., Ltd. and New China Asset Management Co., Ltd., with a registered capital of RMB 500 million.

Pre-approval by the Administration for Industry and Commerce (AIC) merely involves submitting company registration information to the AIC for preliminary review. This step is only a basic procedural requirement, whereas the actual approval of insurance licenses is conducted by the China Insurance Regulatory Commission (CIRC). Therefore, AIC pre-approval holds no substantive significance; it merely indicates how many companies are applying for insurance licenses. The table below presents a list of life insurance companies that have received pre-approval, as compiled by Securities Daily.



We were unable to find additional information regarding the background details of the companies under review listed in the above table. However, we noted that four of them are applying for internet life insurance licenses. In addition to ZhongAn Insurance, which is seeking a life insurance license after already holding a property and casualty insurance license, we also spotted the name Jiuan Online. Furthermore, Fosun Health Insurance Co., Ltd. emerged in June. After establishing Fosun Pramerica Life Insurance Co., Ltd. in 2012, is the Fosun Group now planning to set up another health insurance company?

Life insurance company approvals have always been scarce. According to our review of records, the China Insurance Regulatory Commission (CIRC) approved only two life insurers in 2014—Shanghai Life Insurance and Guolian Life Insurance—and one in 2013, Haibo Life Insurance. Moreover, the number of applications submitted over the past two years was not as high as in 2015.

To be continued. Please stay tuned: Part III: How Profitable Is the Internet Insurance Business?