China's move to raise limits on foreign ownership of insurance companies will benefit the country's insurance industry and the life insurance sector is poised to see expanded foreign investment, according to Mr James Chan, senior financial analyst at AM Best in an episode of AM BestTV.

He spoke about China's initiative to open further the market to foreign companies in the financial services industry, including the insurance sector.

“Last year, China made a regulatory move to lift the cap on foreign ownership of insurance companies to 51% and also to remove the cap within the next three years,” said Mr Chan. “Regulators have granted approvals to several insurers and banks to enter China's market.”

He also said foreign ownership to date has been more prevalent on the non-life insurance side.

“Between the life and non-life insurance sectors in China, the latter is relatively more open to foreign investors,” said Mr Chan. “On the life side, the majority of the life insurance companies are joint ventures between domestic non-insurance enterprises with foreign insurance groups, but only a handful of them have foreign ownership of 5% or more. Despite increasing affluence and an expanding middle-income class in China, the protection gap remains quite wide. In AM Best’s opinion, China’s life insurance sector poses many opportunities for foreign capital.”