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 Industry1.1 Introduction1.2 The nature of insurance 1.3 Reasons and objectives of insurance regulation1.4 The outline of this book1.5 The development of China’s insurance industry1.6 The present insurance market in China1.7 The further development of the insurance industry1.8 Conclusion CHAPTER 2 Chinese Legal System and the Insurance Legislation2.1 Introduction 2.2 Philosophical traditions of Chinese law2.3 The legislative system2.4 The judicial system 2.5 Insurance legislation in China2.6 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 China2.11 ConclusionCHAPTER 3 Insurance Supervision and Regulation Authority and System3.1 Introduction3.2 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 Council3.4 The China Banking and Insurance Regulatory Commission3.5 The functions and responsibilities of local offices of the CBIRC3.6 The new duty of the local offices of the CBIRC to implement certain administrative licensing matters3.7 The allocation of responsibilities between the CBIRC and its local offices for the supervision and regulation of property insurance companies and reinsurance companies3.8 Methods of insurance supervision and regulation 3.9 Corrective measures and administrative penalties 3.10 Conclusion CHAPTER 4 Formation and Dissolution of Insurance Companies4.1 Introduction4.2 Formation of insurance companies 4.3 Formation of branch offices4.4 Formation of overseas insurance institutions4.5 Formation of reinsurance companies4.6 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 institutions4.10 Supervision and administration of insurance group companies4.11 ConclusionCHAPTER 5 Regulation of Foreign-Funded Insurance Companies and the Representative Offices of Foreign Insurance Institutions5.1 Introduction5.2 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 China5.5 ConclusionCHAPTER 6 Regulation of Administrative Licencing and Insurance Permits6.1 Introduction 6.2 The principles of insurance licensing6.3 Administrative licensing and insurance permits6.4 The Provisions on Implementation Procedures of Administrative Licensing 6.5 Regulation of insurance permits6.6 ConclusionCHAPTER 7 Regulation of Corporate Governance7.1 Introduction7.2 The legal framework for corporate governance of insurance companies7.3 Statutory requirements for directors, supervisors and senior officers of insurance companies7.4 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 companies7.7 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 companies7.10 Compliance management of insurance companies7.11 Related-party transactions of insurance companies7.12 Risk management of insurance companies7.13 Comprehensive risk management of personal insurance companies7.14 Internal control of insurance companies7.15 Evaluation of insurance company corporate governance7.16 Corporate governance of insurance group companies and of insurance groups7.17 Information disclosure by insurance companies7.18 Corporate governance action plan for three years from 2020 to 20227.19 ConclusionCHAPTER 8 Regulation of Equites of Insurance Companies8.1 Introduction8.2 Classification of equites of insurance companies8.3 Qualifications of shareholders8.4 Acquisition of equities8.5 Funds for acquiring equities8.6 Behaviours of shareholders8.7 Management of equity matters8.8 Submission of materials to the CBIRC8.9 Supervision and administration8.10 Equity information disclosure by insurance companies8.11 ConclusionCHAPTER 9 Regulation of Insurance Business9.1 Introduction9.2 An overview of law and regulations for insurance business9.3 The regulation on scope of insurance business9.4 Statutory and regulatory requirements for insurance clauses and premium rates9.5 Regulation of insurance clauses and premium rates of property insurance 9.6 Regulation of insurance clauses and premium rates of commercial motor vehicle insurance9.7 Regulation of insurance clauses and premium rates of personal insurance 9.8 Development of insurance products by property insurance companies9.9 Improving the product supervision of property insurance companies9.10 Strengthening the supervision of personal insurance products9.11 Regulation of product development and design of personal insurance companies9.12 Regulation of information disclosure of insurance products9.13 Premium rate adjustment and information disclosure of long-term medical insurance products9.14 Regulation of actuaries9.15 Regulation of reinsurance business9.16 ConclusionCHAPTER 10 Regulation of Conduct of Insurance Companies 10.1 Introduction10.2 Legal framework for the regulation of the conduct of insurers10.3 Regulation of the conduct of insurance business10.4 Regulation on conduct of insurers in advertising or selling insurance products10.5 Prohibition of misconducts of insurers and their employees10.6 Guidelines for the determination of misleading sales of personal insurance10.7 Guiding opinions on liability for misleading sales of personal insurance10.8 The basic services of the personal insurance business10.9 Telephone sales of insurance products10.10 Retrospective administration of insurance sales practices10.11 Electronic return visit of life insurance10.12 Regulation of the conduct of insurance claims10.13 Evaluation of the service of insurance companies 10.14 Evaluation of the business operation of insurance companies 10.15 ConclusionCHAPTER 11 Regulation of Solvency11.1 Introduction11.2 The legal framework of regulation of solvency11.3 The first generation of solvency regulation system11.4 The conceptual framework of the second generation of solvency regulation system11.5 The documentary framework of C-ROSS11.6 The impact of the C-ROSS11.7 The second phase of the construction of the C-ROSS11.8 Capital guarantee funds11.9 The management of reserves for non-life insurance businesses of insurance companies11.10 ConclusionCHAPTER 12 Regulation of the Use of Insurance Funds12.1 Introduction12.2 The current state of insurance funds utilization12.3 Regulatory principles for insurance funds utilization12.4 An overview of the regulatory framework regarding the use of insurance funds12.5 Channels for the use of insurance funds12.6 Insurance funds in bank deposits12.7 Insurance funds investment in bonds12.8 Insurance funds investment in stocks 12.9 Investment of insurance funds in real estate12.10 Indirect investment of insurance funds in infrastructure projects12.11 Insurance funds investment in equities12.12 Investing insurance funds in infrastructure debt investment plans12.13 Insurance funds investment in collective trust funds12.14 Investment of insurance funds in venture capital funds 12.15 The proportional regulation of the utilization of insurance funds12.16 Modes of insurance funds utilization12.17 Entrusted investment of insurance funds12.18 Regulation of the insurance asset custody business12.19 Decision–making operating mechanisms for insurance funds utilization12.20 Risk management and control for insurance funds utilization12.21 Supervision and administration for insurance funds utilization12.22 Overseas investment with insurance funds12.23 Administration of insurance assets management companies12.24 Insurance asset allocation management12.25 Internal control of insurance funds12.26 The scoring supervision over internal control and regulatory compliance in the use of insurance funds12.27 Five-grade risk based insurance asset classification 12.28 Disclosure of capital use information by insurance companies12.29 ConclusionCHAPTER 13 Regulation of Insurance Agents13.1 Introduction13.2 Insurance intermediaries market in China 13.3 General agency principles13.4 Regulations of insurance agents13.5 The duties of insurance agents13.6 Supervision and administration of insurance agents 13.7 Regulation of side-line bancassurance business13.8 Strengthening the supervision and administration of insurance intermediaries13.9 Strengthening the administration of intermediary channel of insurance companies13.10 ConclusionCHAPTER 14 Regulation of Insurance Brokers14.1 Introduction14.2 Insurance brokerage market in China14.3 An overview of regulation of insurance brokers14.4 The features of insurance brokers14.5 The business scope of insurance broker14.6 The duties of insurance brokers14.7 Insurance brokers’ liability for loss and damages caused to the proposers14.8 Regulatory rules for insurance brokers 14.9 Foreign-funded insurance brokers14.10 ConclusionCHAPTER 15 Regulation of Insurance Adjusters15.1 Introduction15.2 The development of insurance adjusters 15.3 The Provisions on the Supervision and Administration of Insurance Adjusters15.4 The basic rules for insurance adjusting15.5 Foreign investors are permitted to operate loss adjusting business in China15.6 Factors which affects legal effect of an insurance adjusting report15.7 ConclusionCHAPTER 16 Health Insurance16.1 Introduction16.2 The present position of commercial health insurance in China16.3 An overview of the regulatory framework for commercial health insurance16.4 The Opinions of the General Office of the State Council on Accelerating Development of Commercial Health Insurance 201416.5 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 Introduction17.2 The legal framework for the regulation of commercial pension insurance17.3 The State Council’s opinions on the development of commercial pension insurance17.4 The measures for the administration of old-age security management business17.5 The programme of the elderly housing reverse mortgage pension insurance17.6 The programme of individual tax-deferred commercial pension insurance business17.7 The Interim Measures for the Administration of the Utilization of Individual Tax- Deferred Commercial Pension Insurance Funds Conclusion CHAPTER 18 Agriculture Insurance18.1 Introduction 18.2 An overview of the regulatory framework for agriculture insurance in China 18.3 Development of agriculture insurance in China18.4 The State Council’s Regulation of Agriculture Insurance18.5 Qualification requirements for an insurance company to conduct agriculture insurance18.6 Agriculture insurance contracts clauses and premium rates18.7 The drafting of clauses on agriculture insurance products subsidized by the centraltreasury18.8 Catastrophe risk reserve of agriculture insurance18.9 Underwriting and claim handing of agriculture insurance 18.10 Premium subsidies by governments18.11 The Pilot Programme on agricultural catastrophe insurance 18.12 The Pilot Programme of full cost insurance and income insurance for the three majorgrain crops18.13 Further development of agriculture insurance18.14 Self-regulation of agriculture insurance Typical crop insurance clauses 18.16 ConclusionCHAPTER 19 Catastrophe Insurance19.1 Introduction19.2 The legal framework for catastrophe insurance19.3 The China Urban and Rural Residential Building Earthquakes Catastrophe Insurance Pool and the early development of the catastrophe insurance system19.4 The Implementation Plan for Establishing the Catastrophe Insurance System for Urban and Rural Residential Housing in Earthquakes19.5 The Measures for the Administration of the Special Reserve Fund for Urban and Rural Residents' Earthquake Catastrophe Insurance19.6 The Model Insurance Clauses for Urban and Rural Residents Housing Earthquake Catastrophe Insurance 19.7 Earthquake insurance practice in Sichuan Province19.8 Earthquake insurance systems in other countries19.9 ConclusionCHAPTER 20 Motor Vehicle Insurance20.1 Introduction20.2 Legal framework for motor insurance20.3 Compulsory motor insurers20.4 Persons who are required to take compulsory motor insurance20.5 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 victims20.8 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 contract22.11 The Road Traffic Accident Social Relief Fund 20.12 The third party rights against the insurers20.13 Non-compulsory commercial motor insurance20.14 ConclusionCHAPTER 21 Regulation of Internet Insurance21.1 Introduction21.2 The development of Internet insurance in China21.3 Regulation of internet insurance21.4 Guarantee insurance business on Internet platform21.5 Retrospective management of Internet insurance sales activities21.6 ConclusionCHAPTER 22 Regulation of Mutual Insurance Organisations22.1 Introduction22.2 The development and significance of mutual insurance in China22.3 Pilot Measures for the Supervision and Administration of Mutual Insurance Organizations22.4 ConclusionCHAPTER 23 Protection of Insurance Consumers23.1 Introduction23.2 Legal framework for the protection of the insurance consumers23.3 Insurance consumer confidence index23.4 An overview of the insurance security fund23.5 The Administration of insurance security fund23.6 The business operation of the Insurance Security Fund Co. Ltd 23.7 The construction of system and mechanisms for protection of consumers23.8 The handling of consumers’ complains 23.9 Consumers disputes resolution23.10 ConclusionCHAPTER 24 The Self-Regulatory Institutions24.1 Introduction24.2 The Insurance Association of China24.3 Insurance Asset Management Association of China24.4 Insurance intermediary associations24.5 ConclusionAppendix 1 The Insurance Law of the People’s Republic of China