The China Banking and Insurance Regulatory Commission (CBIRC) has this year increased the country’s foreign ownership limit for life insurers from 51% to 100%.
Analytics company GlobalData predicts that this will offer vast opportunities for foreign life insurance firms, which only held an 8.1% share of the Chinese market in 2018.
It forecasts China's life insurance market to grow at a compound annual rate of 9.6%, with premium income rising from $316.6bn (£241bn) in 2018 to $484bn in 2023.
The CBIRC has also relaxed the stringent requirement of 30 years operating experience for foreign insurers entering the market, and the need for a China office for two years.
"Increased foreign participation is likely to bring more benefits for mainland customers," said Ashish Raj, senior insurance analyst at GlobalData.
"Large foreign insurers are expected to apply for new licences, while existing foreign life insurers are expected to increase their stake in the operating joint ventures."
However, GlobalData warned that the authorisation and licencing process for foreign insurers and their branch offices and call centres is "complex, tedious and time-consuming".
The business licence is granted in two stages, with up to 12 months needed between the granting of a preparatory licence and an operating one.
An authorised company must obtain a separate licence to establish branch offices and call centres. Approval is required at a provincial level for business expansion across the country.
Even though AIA, a Hong Kong-based life insurer, has held an 100% stake in its Chinese subsidiary since 1992, its presence is limited to only two provinces and four cities.
Furthermore, the solvency requirements for insurers differ based on their business structure, risk profiles and risk management capabilities.
A foreign-funded insurer must maintain a minimum capital requirement of $30.2m or an equivalent amount in a freely convertible currency.
"The Chinese life insurance industry is a lucrative market for foreign insurers but there are sizable entry barriers," Raj said. "The removal of limits on foreign ownership can lead to the overall development of the life insurance industry."