27 May 2016
CIRC Clarifies Licensing for Banks Engaged in Sideline Insurance Agency Business
The China Insurance Regulatory Commission (CIRC) recently issued its Circular on Matters Relating to the Administrative Licensing of Banks Engaged in Sideline Insurance Agency Business with a view to better regulating the sideline insurance agency business of banks.
The Circular replaces the past practice of requiring each service outlet to declare its eligibility to practise as a sideline insurance agent and hold the corresponding business licence with a system where "the legal entity shall declare its eligibility to practise as a sideline insurance agent and hold the corresponding business licence, with all service outlets being registered under this legal entity".
According to the Circular, legal entities may apply to the local CIRC office in their place of registration for a sideline insurance agent licence through CIRC's designated information system starting from 1 June 2016. If the legal entity of a banking institution has not yet obtained this licence but its branches have, the legal entity must apply to the local CIRC office for licensing in accordance with the requirements for first-time applications before 29 July 2016. If the legal entity already holds a valid licence, it must complete the relevant registration on the designated information system and surrender to the CIRC office the sideline insurance agent licence of all its branches.
CIRC reckons that the number of licences issued to banks to engage in sideline insurance agency business will be reduced from 180,000 to about 3,000 after the Circular takes effect. The new practice will not just make the work of the administrative licence holder simpler but will allow the insurance regulator to free itself from heaps of repetitive administrative red tape and devote its limited resources to operational and post-operational oversight.