China’s First Mutual Insurer Opens

By Yang Qiaoling and Han Wei

(Beijing) — China’s first mutual insurer has opened in Beijing, representing a step toward the country’s goal of diversifying its insurance industry.

Zhonghui Property Mutual Insurance, with initial working capital of 1 billion yuan ($146 million) 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 United States established its first mutual insurance company in 1752. Now the National Association of Mutual Insurance Companies (NAMIC), which represent mutual insurers in U.S. and Canada, has over 1,400 member companies, according to NAMIC’s website.

Worldwide, mutual insurance represents about 27% of global insurance premiums in 2014, according to the International Cooperative and Mutual Insurance Federation.

In China, the business structure of mutual insurance only won government approval in 2015. In April 2016, the State Council, China’s cabinet, approved the launch of a pilot program to set up mutual insurance companies.

“We hope mutual insurance can provide services that supplement rather than compete with those in the traditional (insurance) sector,” He Xiaofeng, an official from the CIRC, said in June, adding that mutual insurance associations are aimed at promoting the public good rather than seeking maximum profit.

Zhonghui Property currently has 546 members, and its 1 billion yuan initial working capital was provided by 10 company members and two individual members in the form of loans. Among those contributing were Wintime Energy Co., Shenzhen KeyBridge Network Technology Co., Kunwu Jiuding Capital Holdings Co. and Qianhai Financial Holdings, Zhonghui Property Chairman Li Jing said.

Li said that a 21-member committee is elected by the 546 members to oversee the daily business operation and make investment decision for Zhonghui Property.

Zhonghui Property will focus on credit insurance policies to small business and limit potential liquidity risks by careful scrutiny of policy buyers and by offering smaller-value contracts, Li said.

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.

Contact reporter Han Wei (

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