The Regulation of Insurance in China

Professor Zhen Jing is Chair in Commercial Law at the School of Law, Bangor University. She has taught insurance law for many years and has practical experience in the Chinese insurance industry. She is author of Chinese Insurance Contracts: Law and Practice which was awarded the 2017 British Insurance Law Association Book Prize.

CHAPTER 1 Introduction of Insurance Regulation and

Insurance Industry

1.1 Introduction

1.2 The nature of insurance

1.3 Reasons and objectives of insurance regulation

1.4 The outline of this book

1.5 The development of China’s insurance industry

1.6 The present insurance market in China

1.7 The further development of the insurance industry

1.8 Conclusion

CHAPTER 2 Chinese Legal System and the Insurance

Legislation

2.1 Introduction

2.2 Philosophical traditions of Chinese law

2.3 The legislative system

2.4 The judicial system

2.5 Insurance legislation in China

2.6 Administrative regulations by the State Council








The judicial interpretations of statutory law by the SPC



Regulations enacted by the insurance supervision and regulation authority of the State



Council and other relevant regulatory authorities








Self-regulation rules



2.10 The regulatory framework of insurance in China

2.11 Conclusion

CHAPTER 3 Insurance Supervision and Regulation Authority

and System

3.1 Introduction

3.2 A historical consideration of the development of insurance regulatory authority

3.3 Statutory functions and responsibilities of the insurance supervision and

regulation authority of the State Council

3.4 The China Banking and Insurance Regulatory Commission

3.5 The functions and responsibilities of local offices of the CBIRC

3.6 The new duty of the local offices of the CBIRC to implement certain administrative licensing matters

3.7 The allocation of responsibilities between the CBIRC and its local offices for the

supervision and regulation of property insurance companies and reinsurance companies

3.8 Methods of insurance supervision and regulation

3.9 Corrective measures and administrative penalties

3.10 Conclusion

CHAPTER 4 Formation and Dissolution of Insurance

Companies

4.1 Introduction

4.2 Formation of insurance companies

4.3 Formation of branch offices

4.4 Formation of overseas insurance institutions

4.5 Formation of reinsurance companies

4.6 Formation and business scope of insurance group companies








Regulation on modification, dissolution and abolition of insurance institutions



Market access and withdrawal of non-insurance subsidiaries of insurance companies



4.9 Supervision and administration of insurance institutions

4.10 Supervision and administration of insurance group companies

4.11 Conclusion

CHAPTER 5 Regulation of Foreign-Funded Insurance

Companies and the Representative Offices of

Foreign Insurance Institutions

5.1 Introduction

5.2 Regulation on the administration of foreign-funded insurance companies

5.3 The Implementation Rules for the RAFFIC

5.4 Administration of representative offices of foreign insurance institutions in China

5.5 Conclusion

CHAPTER 6 Regulation of Administrative Licencing and

Insurance Permits

6.1 Introduction

6.2 The principles of insurance licensing

6.3 Administrative licensing and insurance permits

6.4 The Provisions on Implementation Procedures of Administrative Licensing

6.5 Regulation of insurance permits

6.6 Conclusion

CHAPTER 7 Regulation of Corporate Governance

7.1 Introduction

7.2 The legal framework for corporate governance of insurance companies

7.3 Statutory requirements for directors, supervisors and senior officers of insurance

companies

7.4 Requirements for directors, supervisors and senior officers formulated by the CBIRC








The regulation of corporate governance structure



7.6 Regulation of the operation of the board of directors of insurance companies

7.7 Administration of auditing of directors and senior managers of insurance companies








Internal audit of insurance companies



7.9 Guidelines for salary management rules of insurance companies

7.10 Compliance management of insurance companies

7.11 Related-party transactions of insurance companies

7.12 Risk management of insurance companies

7.13 Comprehensive risk management of personal insurance companies

7.14 Internal control of insurance companies

7.15 Evaluation of insurance company corporate governance

7.16 Corporate governance of insurance group companies and of insurance groups

7.17 Information disclosure by insurance companies

7.18 Corporate governance action plan for three years from 2020 to 2022

7.19 Conclusion

CHAPTER 8 Regulation of Equites of Insurance Companies

8.1 Introduction

8.2 Classification of equites of insurance companies

8.3 Qualifications of shareholders

8.4 Acquisition of equities

8.5 Funds for acquiring equities

8.6 Behaviours of shareholders

8.7 Management of equity matters

8.8 Submission of materials to the CBIRC

8.9 Supervision and administration

8.10 Equity information disclosure by insurance companies

8.11 Conclusion

CHAPTER 9 Regulation of Insurance Business

9.1 Introduction

9.2 An overview of law and regulations for insurance business

9.3 The regulation on scope of insurance business

9.4 Statutory and regulatory requirements for insurance clauses and premium rates

9.5 Regulation of insurance clauses and premium rates of property insurance

9.6 Regulation of insurance clauses and premium rates of commercial motor vehicle

insurance

9.7 Regulation of insurance clauses and premium rates of personal insurance

9.8 Development of insurance products by property insurance companies

9.9 Improving the product supervision of property insurance companies

9.10 Strengthening the supervision of personal insurance products

9.11 Regulation of product development and design of personal insurance companies

9.12 Regulation of information disclosure of insurance products

9.13 Premium rate adjustment and information disclosure of long-term medical insurance

products

9.14 Regulation of actuaries

9.15 Regulation of reinsurance business

9.16 Conclusion

CHAPTER 10 Regulation of Conduct of Insurance Companies

10.1 Introduction

10.2 Legal framework for the regulation of the conduct of insurers

10.3 Regulation of the conduct of insurance business

10.4 Regulation on conduct of insurers in advertising or selling insurance products

10.5 Prohibition of misconducts of insurers and their employees

10.6 Guidelines for the determination of misleading sales of personal insurance

10.7 Guiding opinions on liability for misleading sales of personal insurance

10.8 The basic services of the personal insurance business

10.9 Telephone sales of insurance products

10.10 Retrospective administration of insurance sales practices

10.11 Electronic return visit of life insurance

10.12 Regulation of the conduct of insurance claims

10.13 Evaluation of the service of insurance companies

10.14 Evaluation of the business operation of insurance companies

10.15 Conclusion

CHAPTER 11 Regulation of Solvency

11.1 Introduction

11.2 The legal framework of regulation of solvency

11.3 The first generation of solvency regulation system

11.4 The conceptual framework of the second generation of solvency regulation system

11.5 The documentary framework of C-ROSS

11.6 The impact of the C-ROSS

11.7 The second phase of the construction of the C-ROSS

11.8 Capital guarantee funds

11.9 The management of reserves for non-life insurance businesses of insurance companies

11.10 Conclusion

CHAPTER 12 Regulation of the Use of Insurance Funds

12.1 Introduction

12.2 The current state of insurance funds utilization

12.3 Regulatory principles for insurance funds utilization

12.4 An overview of the regulatory framework regarding the use of insurance funds

12.5 Channels for the use of insurance funds

12.6 Insurance funds in bank deposits

12.7 Insurance funds investment in bonds

12.8 Insurance funds investment in stocks

12.9 Investment of insurance funds in real estate

12.10 Indirect investment of insurance funds in infrastructure projects

12.11 Insurance funds investment in equities

12.12 Investing insurance funds in infrastructure debt investment plans

12.13 Insurance funds investment in collective trust funds

12.14 Investment of insurance funds in venture capital funds

12.15 The proportional regulation of the utilization of insurance funds

12.16 Modes of insurance funds utilization

12.17 Entrusted investment of insurance funds

12.18 Regulation of the insurance asset custody business

12.19 Decision–making operating mechanisms for insurance funds utilization

12.20 Risk management and control for insurance funds utilization

12.21 Supervision and administration for insurance funds utilization

12.22 Overseas investment with insurance funds

12.23 Administration of insurance assets management companies

12.24 Insurance asset allocation management

12.25 Internal control of insurance funds

12.26 The scoring supervision over internal control and regulatory compliance in the use of

insurance funds

12.27 Five-grade risk based insurance asset classification

12.28 Disclosure of capital use information by insurance companies

12.29 Conclusion

CHAPTER 13 Regulation of Insurance Agents

13.1 Introduction

13.2 Insurance intermediaries market in China

13.3 General agency principles

13.4 Regulations of insurance agents

13.5 The duties of insurance agents

13.6 Supervision and administration of insurance agents

13.7 Regulation of side-line bancassurance business

13.8 Strengthening the supervision and administration of insurance intermediaries

13.9 Strengthening the administration of intermediary channel of insurance companies

13.10 Conclusion

CHAPTER 14 Regulation of Insurance Brokers

14.1 Introduction

14.2 Insurance brokerage market in China

14.3 An overview of regulation of insurance brokers

14.4 The features of insurance brokers

14.5 The business scope of insurance broker

14.6 The duties of insurance brokers

14.7 Insurance brokers’ liability for loss and damages caused to the proposers

14.8 Regulatory rules for insurance brokers

14.9 Foreign-funded insurance brokers

14.10 Conclusion

CHAPTER 15 Regulation of Insurance Adjusters

15.1 Introduction

15.2 The development of insurance adjusters

15.3 The Provisions on the Supervision and Administration of Insurance Adjusters

15.4 The basic rules for insurance adjusting

15.5 Foreign investors are permitted to operate loss adjusting business in China

15.6 Factors which affects legal effect of an insurance adjusting report

15.7 Conclusion

CHAPTER 16 Health Insurance

16.1 Introduction

16.2 The present position of commercial health insurance in China

16.3 An overview of the regulatory framework for commercial health insurance

16.4 The Opinions of the General Office of the State Council on Accelerating Development

of Commercial Health Insurance 2014

16.5 The Measures for the Administration of Health Insurance

16.6 Health insurance business with individual tax preferences








Critical illness insurance



Conclusion



CHAPTER 17 Pension Insurance

17.1 Introduction

17.2 The legal framework for the regulation of commercial pension insurance

17.3 The State Council’s opinions on the development of commercial pension insurance

17.4 The measures for the administration of old-age security management business

17.5 The programme of the elderly housing reverse mortgage pension insurance

17.6 The programme of individual tax-deferred commercial pension insurance business

17.7 The Interim Measures for the Administration of the Utilization of Individual Tax-

Deferred Commercial Pension Insurance Funds








Conclusion



CHAPTER 18 Agriculture Insurance

18.1 Introduction

18.2 An overview of the regulatory framework for agriculture insurance in China

18.3 Development of agriculture insurance in China

18.4 The State Council’s Regulation of Agriculture Insurance

18.5 Qualification requirements for an insurance company to conduct agriculture insurance

18.6 Agriculture insurance contracts clauses and premium rates

18.7 The drafting of clauses on agriculture insurance products subsidized by the central

treasury

18.8 Catastrophe risk reserve of agriculture insurance

18.9 Underwriting and claim handing of agriculture insurance

18.10 Premium subsidies by governments

18.11 The Pilot Programme on agricultural catastrophe insurance

18.12 The Pilot Programme of full cost insurance and income insurance for the three major

grain crops

18.13 Further development of agriculture insurance

18.14 Self-regulation of agriculture insurance








Typical crop insurance clauses



18.16 Conclusion

CHAPTER 19 Catastrophe Insurance

19.1 Introduction

19.2 The legal framework for catastrophe insurance

19.3 The China Urban and Rural Residential Building Earthquakes Catastrophe Insurance

Pool and the early development of the catastrophe insurance system

19.4 The Implementation Plan for Establishing the Catastrophe Insurance System for Urban

and Rural Residential Housing in Earthquakes

19.5 The Measures for the Administration of the Special Reserve Fund for Urban and Rural

Residents' Earthquake Catastrophe Insurance

19.6 The Model Insurance Clauses for Urban and Rural Residents Housing Earthquake

Catastrophe Insurance

19.7 Earthquake insurance practice in Sichuan Province

19.8 Earthquake insurance systems in other countries

19.9 Conclusion

CHAPTER 20 Motor Vehicle Insurance

20.1 Introduction

20.2 Legal framework for motor insurance

20.3 Compulsory motor insurers

20.4 Persons who are required to take compulsory motor insurance

20.5 The scope of the insured persons








The limits of the amount covered under a compulsory motor insurance policy



20.7 The scope of the third party victims

20.8 The insured’s pre-contractual duty of disclosure

20.9 The insurer’s pre-contractual duty to explain the content of the contract

20.10 The contents of a compulsory motor insurance contract

22.11 The Road Traffic Accident Social Relief Fund

20.12 The third party rights against the insurers

20.13 Non-compulsory commercial motor insurance

20.14 Conclusion

CHAPTER 21 Regulation of Internet Insurance

21.1 Introduction

21.2 The development of Internet insurance in China

21.3 Regulation of internet insurance

21.4 Guarantee insurance business on Internet platform

21.5 Retrospective management of Internet insurance sales activities

21.6 Conclusion

CHAPTER 22 Regulation of Mutual Insurance Organisations

22.1 Introduction

22.2 The development and significance of mutual insurance in China

22.3 Pilot Measures for the Supervision and Administration of Mutual Insurance

Organizations

22.4 Conclusion

CHAPTER 23 Protection of Insurance Consumers

23.1 Introduction

23.2 Legal framework for the protection of the insurance consumers

23.3 Insurance consumer confidence index

23.4 An overview of the insurance security fund

23.5 The Administration of insurance security fund

23.6 The business operation of the Insurance Security Fund Co. Ltd

23.7 The construction of system and mechanisms for protection of consumers

23.8 The handling of consumers’ complains

23.9 Consumers disputes resolution

23.10 Conclusion

CHAPTER 24 The Self-Regulatory Institutions

24.1 Introduction

24.2 The Insurance Association of China

24.3 Insurance Asset Management Association of China

24.4 Insurance intermediary associations

24.5 Conclusion

Appendix 1 The Insurance Law of the People’s Republic of China