China may lift limits on the amount of insurance funds that can be invested in stocks and allow insurers greater access to the bullish stock market.

The Shanghai-based Oriental Post quoted an unnamed insider as saying that another 10 billion yuan will flow into China's stock market if insurers' investment ceiling rises from 5 to 10 percent.

The China Insurance Regulatory Commission (CIRC) has approved the new rules in principle but no timetable has been set, said the newspaper.

The total assets of China's insurance sector stood at almost 2 trillion yuan at the end of last year, according to CIRC statistics.

The authority is considering encouraging medium and small-sized insurers to invest in stocks, granting them investment opportunities equal to the industry heavyweights.

Mingsheng Life and Shengming Life have reportedly been approved to run asset management companies, previously restricted to the ten big insurers in China that account for over 90 percent of the insurance funds invested in Chinese stocks.

CIRC solicited advice from heads of medium and small-sized insurers this February and debated whether it should allow insurance funds to invest in infrastructure construction and the use of insurers' foreign exchange holdings to finance Chinese firms' overseas IPOs, according to the newspaper.

Insiders said capital from the less-powerful insurers will have limited impact on the two bourses considering their relatively small amounts of capital and their focus on business expansion rather than equity investment, the newspaper reported.

China's insurers earned 8.9 billion yuan (about 1.1 billion U.S. dollars) by investing insurance funds in the country's bullish stock market last year, according to CIRC figures.

Insurance industry stock investments yielded a heady 27.1 percent, more than quadruple the figure for total returns on insurance funds.

After a four-year recession, China's mainland stock markets began to rally at the beginning of 2006, with the benchmark Shanghai Composite Index continuously hitting new highs.

The index climbed to a record 3,040.60 points on the first trading day of the Year of the Pig, or Feb 26.