China: China Insurance Regulatory Commission (CIRC) Tentative Administrative Measures On Insurance Business Transfer Of Insurance Companies

Last Updated: 30 March 2011
Article by Carrie Yang and David Coupe

The China Insurance Regulatory Commission ("CIRC") released a draft version of Tentative Administrative Measures on Insurance Business Transfer of Insurance Companies ("Draft Measures") on 22 March 2011 for public comment. Comment is invited before11 April 2011.

The present Insurance Law of the People's Republic of China ("PRC Insurance Law") does not contain any provisions regarding the transfer of all or part of the primary risks forming the business of one insurance company to another insurance company.

Under the present PRC Insurance Law, a transfer of the business portfolio of an insurance company can only be conducted by way of reinsurance or when a life insurance company becomes insolvent. The Draft Measures have for the first time under the PRC law imported the concept of a "transfer of insurance business" – this will be of interest to many insurance companies and companies involved in the run-off business. We have reviewed the Draft Measures and set out the key features of the same below, with references to the Part VII FiSMA transfer mechanism under UK legislation where appropriate:-


According to the CIRC, the Draft Measures aim to regulate the transfer of insurance business and to protect the interests of the policyholders and insured.


According to the Draft Measures, an insurance company wishing to transfer all or part of its insurance business will require the approval of the CIRC only. Unlike a Part VII transfer, a Court will not be engaged under the Draft Measures.

Qualifications of the transferee

The Draft Measures specified the necessary qualifications for the transferee to be as follows:

  1. The business being transferred is within the scope of the existing business of the transferee ie it does not need to extend its licences;
  2. It must possess good corporate governance and sound internal controls;
  3. It must have adequate solvency such that, after taking on the business to be transferred, it will meet the relevant solvency requirements set by the CIRC;
  4. It must be of good repute with no major violation of any law or regulation in the past two years;
  5. It shall have branch offices in each of the places where the insurance policies to be transferred were initially issued – this is especially important where the transferee is an overseas insurer licenced in China. Many will not have the necessary branches for this purpose.
  6. It has carried out a feasibility study in relation to the future management and acceptance of the business to be transferred;
  7. It complies with such other conditions as may be prescribed by the CIRC.


In accordance with the Draft Measures, both the transferor and the transferee shall submit the following materials to the CIRC for approval: -

  1. The basic corporate information of both parties involved in the transfer;
  2. The insurance business transfer agreement;
  3. The planned arrangements for transfer of the insurance business;
  4. A feasibility study relating to the future management of the business to be transferred;
  5. Assessment reports issued by professional intermediaries;
  6. An assessment report on the liability reserves of the insurance business to be transferred – these will presumably be similar to the Independent Expert Reports required in a Part VII transfer (see below);
  7. An analysis on the solvency of the transferee, as of last year, and an analysis of the impact the transfer will have on company solvency- again this will presumably be in the independent expert report (see below);
  8. A document from the board of directors or the shareholders' meeting of both companies which approves the insurance business transfer agreement; and
  9. Such other materials as required by the provisions of the CIRC.

Appointment of Independent Experts

In the UK, the current legislation requires an independent expert to assess the solvency of both the transferor and the transferee, and report to the Court.

As explained earlier, no Court approval is proposed under the Draft Measures. However, the Draft Measures require both parties involved in the transfer of insurance business to engage professional intermediaries such as law firms and accounting firms to assess various aspects (e.g. value of the business, compliance with relevant regulations) of the insurance business to be transferred. Assessment reports from the professional intermediaries will constitute part of the submission to the CIRC for approval.

The Draft Measures do not contain any provisions regarding the qualifications or criteria for selection of professional intermediaries. It is currently unclear whether the selection of professional intermediaries will require pre-approval by the CIRC as it does under UK law.

Consultation with the policyholder/insureds

The Draft Measures provide that, after the CIRC has approved an insurance business transfer agreement in principle, the transferor shall promptly notify the policyholders and insureds in writing of basic information about the transferee, an outline of the transfer programme and assumption of insurance liability and other related matters, and obtain the consent of policyholders and the insured. The Draft Measures do not go on to deal with circumstances where the policyholders and insured oppose the transfer. The Draft Measures also fail to elaborate upon how any communications with the policyholders/insureds shall be dealt with if the relevant business is placed by brokers ie can notification be to the broker only which would be administratively easier. However, unlike the UK, the broker market in China is less developed, and this may be of lesser benefit.

Public notice

The Draft Measures require that after the CIRC has approved the transfer agreement, both companies involved in the transfer shall jointly announce the proposed transfer in the newspapers not less than three times, and also post a notice of the transfer on their respective official websites for a minimum of one month.

Effect of the transfer

The Draft Measures do not specify the effects of the transfer, but imply that all of the business included in the transfer will be transferred to the transferee. and it will be as if the insurance contracts had been originally entered into by the transferee. It is hoped that this will be clarified during Consultation.

An insurance company which has transferred all of its business and intends to terminate its business activities should, within 15 working days from the completion of the performance of the transfer agreement, apply to the CIRC to cancel its insurance permit licence.

Other outstanding issues

There are also no special provisions in the Draft Measures relating to transfer of compulsory insurance business (i.e. Compulsory Motor Vehicle Traffic Accident Liability Insurance).

The Draft Measures are also silent on whether the outwards reinsurances will automatically transfer with the underlying business, and how this will be dealt with.

The Draft Measures do not allow insurance business to be transferred to any insurance companies based outside of the PRC. Transfers can only occur between companies authorised by CIRC. This may result in companies engaged in run-off business seeking to set up in the PRC.

We anticipate that the Draft Measures on the insurance business transfers, once formally issued, will undoubtedly elevate the PRC's insurance industry to a level closer to international standards.

We would hope that many of the above issues will be resolved during consultation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions