ICMIF welcomes approval of three mutual insurance companies in China

Tuesday, 05 July 2016

The China Insurance Regulatory Commission (CIRC) last month granted approvals for the establishment of three mutual insurance companies: Zhonghui Property Mutual, Huiyou Construction Property Mutual and Xinmei Life Mutual.

Xinmei Life Mutual (known as Trust Mutual) is funded by Ant Financial, an online payment services provider which is part of the Alibaba Group, and nine other investors. The mutual life insurer has an initial operation capital of 1 billion yuan. Trust Mutual will focus on developing pension life and healthcare insurance initially for customers of Alibaba utilising the Fintech knowledge of the Alibaba group.  Zhonghui Property Mutual will focus on products development for credit insurance and financing needs of small- to medium-size enterprises in a specific industry.  Huiyou Construction Property Mutual will focus on new insurance products for specific risk protection needs of construction projects, liability and quality guarantee.

Both the International Cooperative and Mutual Insurance Federation (ICMIF) and French member organization the MGEN Group have welcomed the news saying that the move confirms the desire of the Chinese authorities to promote a diverse range of business models for the insurance sector. They also welcomed the news as a recognition of the mutual movement’s success in promoting and expanding the reach of the mutual business model.  Commenting on this historic announcement,

Shaun Tarbuck, Chief Executive of ICMIF said: “China has showed great leadership in allowing mutual insurers to be started in their country.  Not only is it a brave move it is also globally significant as we hope that many of the 45% of the world’s countries that currently don’t allow mutual or cooperative insurance business structures will follow China’s lead.  This will bring much-needed diversity in many developing countries and allow them to develop a strong community-based financial system”.

Jean-Louis Davet, CEO of the MGEN Group and an ICMIF Board Member (pictured right at the International Forum on Operations Experience of Mutual Insurance, China, November 2015), who has been involved in the promotion of mutuals in China since 2010, said: “We are convinced that mutuality, as a business model, will bring many benefits for China. Its structure and its position at the crossroads of private business enterprise and public service, in addition to its ability to integrate obligatory and complementary social insurance, care provision and services is very attractive to the Chinese authorities.”

The MGEN Group, from 2010, and ICMIF have been working closely with the Chinese authorities. The MGEN Group is now seen in China as a reliable mutual expert on social protection, health insurance and long-term care. Representatives from ICMIF and MGEN Group, including Liz Green and Shaun Tarbuck for ICMIF and Jean-Louis Davet of the MGEN Group, have already spoken at a number of seminars and training sessions on mutuality and mutual insurance.  This culminated in the strong involvement of MGEN and ICMIF in a 10 day study visit by a senior CIRC team including their attendance at the AMICE Biennial Congress and meeting and visits with leading European mutuals. They also met with international bodies including AIM (International Association of Mutual Benefit Societies) and some of its members and experts like Karel van Hulle (previously in charge of Solvency II at the European Commission).

The fact that now the mutual model has been given the official seal of approval is a very positive recognition for the mutual movement around the world. Now, China will face the challenge of making the move a successful one.

ICMIF believes that the success of the new mutuals will revolve around their ability to engage with the specific affinity or membership group they represent, and to tackle challenges which are not taken in account today by existing insurance actors. 

For instance there are 100 million farmers in China who have little access to insurance.  In July, ICMIF will take part in a seminar organized in China by the organization Coop China (a member of the International Co-operative Alliance), looking at the financial challenges of agriculture cooperatives, and with a view to start thinking about possible mutual solutions for the agriculture sector. There are many successful farming mutuals in most countries because farmers are a very collaborative group, so there are lots of success-based examples to draw upon.

Another suggestion put forward by ICMIF is to provide mentoring to the new Chinese mutuals from existing ICMIF members so they can receive support and learn from the global movement.

“It’s good to have diversity, and mutuals provide a good balance to the industry,” Tarbuck said “It would be nice to think that in 10 years’ time the Chinese mutual sector could be a significant actor in the Chinese insurance market, acting as a lever to help expand the Chinese insurance market which is expected to grow 20% a year in the years to come.”