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Ant Financial JV among first to get China mutual insurance nod
[BEIJING] China has approved its first three mutual insurance institutions, including one being jointly set up by the financial affiliate of Alibaba Group Holding Ltd, the insurance regulator said on Wednesday.
The mutual insurer being co-founded by Ant Financial will have initial registered capital of 1 billion yuan (S$203.7 million) and will focus on pension and health insurance, the China Insurance Regulatory Commission said in a statement. Ant Financial, controlled by Alibaba co-founder Jack Ma, is known as also known as Zhejiang Ant Small & Micro Financial Services Group.
The regulator will conduct mutual insurance trials for one year before approving such new insurers, He Xiaofeng, head of the insurance watchdog's development and reform department, said at a briefing in Beijing. The CIRC has received applications for more than 30 mutual insurers, though it is limiting the pace of the trials to prevent risks, he said.
The regulator issued rules early last year allowing corporations and individuals to set up mutual insurance companies in a bid to expand coverage to meet growing demand. Such organisations, which are jointly owned by policyholders and offer insurance only to members, typically have lower operational costs and can provide better services in higher-risk areas and to lower-income people.
The regulator later last year said some individuals promised high returns to the public to raise money in the name of setting up mutual insurance companies, a practice that has "disturbed normal financial order."