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China’s first mutual insurer opens
Published on: 2017-02-17
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China's first mutual insurer has opened in Beijing, representing a step toward the country's goal of diversifying its insurance industry.

041Zhonghui Property Mutual Insurance, with initial working capital of 1 billion yuan from 12 founding members, will offer credit insurance to small and midsize enterprises plus short-term health and personal accident insurance, according to a statement published on the website of the China Insurance Regulatory Commission (CIRC).

Zhonghui Property is one of the three mutual insurance associations that won approval from the CIRC in June. The other two, Xinmei Life Mutual Insurance and Huiyou Jiangong Mutual Insurance, are waiting for the commission's final review before starting business, according to a source close to the CIRC.

Xinmei Life will focus on long-term pension and health-insurance policies, while Huiyou Jiangong will specialize in insurance protection for the construction industry, according to the CIRC.

Mutual insurance associations are set up with a cooperative structure and entirely owned and managed by policyholders. By purchasing a policy from a mutual insurer, the buyer becomes a member of the association, and their payment is combined with those of other policyholders to form a fund. Withdrawals are then made from that fund to cover members' claims under pre-agreed conditions.

The launch of mutual insurance associations is part of China's efforts to open up its financial services sector to private investors. The country's insurance sector registered 3.1 trillion yuan in premium income in 2016, up 27.5% from a year earlier. Total assets of the industry stood at 15.12 trillion yuan at the end of 2016, according to the CIRC.

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