RBC Financial Group, Canada's largest financial institution by market capitalization and assets, has been approved to set up an insurance representative office in Beijing, senior executives said, as it steps up its expansion push in China.

RBC Insurance, RBC Financial Group's insurance arm, recently received regulatory approval for the office, which it plans to open soon, according to Director of Business Development Cecile Dyck.

The office, RBC Insurance's first in the Asia-Pacific region, will help RBC establish an insurance presence in the Chinese market, Dyck said.

Under Chinese regulations, an insurance representative office cannot engage in any revenue-generating business and can only function as a liaison or market research house.

And the firm must wait for at least two years before its office can be upgraded into a fully fledged business entity.

"The huge market potential in China is a major reason prompting RBC to enter the country," said Tom Chen, who will act as the chief representative of the office, pointing to China's insurance penetration, or premiums as a percentage of gross domestic product, and premium growth rate.

Insurance penetration is 2.7 per cent in China and 7.02 per cent in Canada.

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