In order to regulate transfers of insurance business by
insurance companies, the China Insurance Regulatory Committee
(CIRC) recently issued the Provisional
Measures on Administration of Insurance Business Transfers by
Insurance Companies (the
"Measures"), which will become effective
on October 1, 2011.
"Transfers of insurance business" refers to when an
insurance company decides to transfer all or part of its insurance
business to another insurance company through mutual consultation
and negotiation. This transfer mechanism is a way for insurance
companies to voluntarily exit from the insurance market. The
Measures do not apply to the following circumstances: (i) an
insurance company that engages in the life insurance business and
is transferring its insurance business as a result of being closed
down or being declared bankrupt; (ii) an insurance company that
fails to meet the prescribed solvency requirements and is forced by
the regulatory committee to transfer its insurance business; and
(iii) an insurance company in the reinsurance business.
In essence, the Measures mainly contain the following: (i) a
requirement that all transfers of insurance business must be
approved by the CIRC; (ii) the basic principles governing insurance
business transfers, including the principles of equality, intent,
transparency, fairness, and the protection of the legal rights of
policyholders and insureds; (iii) the rules governing how the
transferee and the transferor shall assume the obligations and
liabilities in the process of transferring the insurance business,
and the conditions and qualification requirements for the
transferee; and (iv) a requirement that the transferor obtain the
consent of policyholders and insureds to the proposed transfer.
The issuance of the Measures carries great significance for the
regulation of insurance companies exiting from the insurance
market, the better utilization and integration of resources in the
insurance market, and the improved protection of the legal rights
of policyholders, insureds, and beneficiaries.
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.
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