By staff reporter Chen Huiying

Insurance industry regulators have started reviewing investment plans submitted by four commercial banks eager to profit from the growing demand for insurance products in China.

An official with the China Insurance Regulatory Commission (CIRC) said July 29 that its review file now includes insurance business proposals from Industrial and Commercial Bank of China (SSE: 601398, HKSE: 01398), China Construction Bank (SSE: 601939, HKSE: 00939), Bank of Communications (SSE: 601328, HKSE: 03328) and Bank of Beijing (SSE: 601169).

CIRC spokesperson Yuan Li said the banks initially submitted plans to the nation’s banking regulator, which gave its blessing before passing them to the insurance regulator. The last stop in the approval process would be the State Council, China’s cabinet.

No timetable for a final decision has been announced.

Awash in liquidity, commercial banks that have floated insurance business plans for the past two years hope to enter the lucrative field.

The State Council raised hopes early this year by approving a pilot program that gave insurance investment access to as many as four commercial banks.

The four banks whose plans are now before CIRC have hopes to be approved for the pilot program, but the Agricultural Bank of China and China Merchants Bank lost out.

So far, none of the banks have said how much they would invest to launch insurance projects.

The ICBC plan is the most complex. The bank intends to get an insurance license by buying Taiping Life Insurance from its parent China Insurance International Holdings Co. Ltd. (CIIHC). Its method is to join CIIHC as well as the European firm Fortis Group in a joint venture that oversees Taiping Life, Taiping Insurance, Taiping Pension and Taiping Assets Management.

ICBC and CIIHC would each hold 43.5 percent of the venture, while Fortis would control 13 percent. CIIHC and its parent currently own 75 percent of Taiping Life, while Fortis has the rest.

The deal, if successful, would give ICBC a chance to do business in life and property insurance, as well as pension and asset management.

The other bank plans are more straightforward. Construction Bank would buy a stake in Happy Life Insurance, Bank of Communications would invest in China CMG Life Insurance, and Bank of Beijing would buy shares of Pacific-Antai Life Insurance.

Banks are already acting as major sales channels for insurance products. For example, banks handled half of the 13.9 billion yuan in insurance sales reported in Shanghai in the first quarter this year.

Peng Yulong, an analyst from Guotai Junan Securities, said in a recent report that banks currently cut into insurance company profits by charging high commission fees on insurance product sales. However, insurers that partner with banks could enjoy lower commissions and access to more customers.

1 yuan = 14 U.S. cents