Chinese insurance companies will be allowed to invest in the listed and unlisted equities of domestic banks, Wu Dingfu, chairman of the China Insurance Regulatory Commission (CIRC) told a recent symposium.

Relevant policies have been approved by the State Council and will be soon released, Wu said at the Beijing-Tianjin Insurance Symposium in Beijing.

The move, together with a package of policies recently put to effect by CIRC, has unveiled a trend of strengthened cooperation among the country's insurance, banking and securities industries.

In April, the People's Bank of China adjusted its foreign exchange management policy, which expands the overseas securities investment business of insurance organizations and permits qualified insurers to purchase foreign exchange for investment in products with fixed returns and money market tools abroad.

Wu said that the quota for overseas investment by insurance companies will be lifted to 15 percent of their gross assets.

He also said that the State Council has agreed CIRC's decision to allow a number of domestic companies to channel their insurance funds into the country's large infrastructure projects.

Meanwhile, the proportion of insurance companies' actual stock investment to their total assets will be lifted up from the previous one percent to three or four percent.

Under these new policies, insurance firms will no longer need to park most of their assets in low-yielding government bonds and bank deposits. Hikes will be seen in their investment returns, industrial experts noted.

Since China has promised to fully open its service industry in the end of 2006 as required by the World Trade Organization, domestic insurance industry has picked up its pace to expand its presence in home and overseas markets.

"These measures will be of significant and far-reaching influences on the fast but steady development of home insurance industry," Wu said.

The chairman called on insurance organizations to tighten their supervision of insurance fund and be highly alert for possible financial risks.

Official statistics revealed that Chinese insurers had about 1.6 trillion yuan (200 billion U.S. dollars) in gross assets by the end of February. The average returns on investment of China's insurers is expected to rise from 3.5 percent in 2005 to 5 percent in 2006.

Editor: Yan