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.

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”

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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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