On 14 October 2015, the Legislative Affairs Office of the State
Council of the PRC promulgated the draft Decision on Amending the
PRC Insurance Law (Draft for Review and Approval) (Draft
Amendments) on its official website inviting public comments.
Feedback shall be provided before 14 November 2015.
Key aspects proposed to be amended
Improved regulatory supervision
Personal insurance business to be
broadened to include annuities insurance, which would include
enterprise annuity and occupational annuity;
Capital guarantee fund deposited by
an insurance company to be reduced from 20% to 10% of the
registered capital and to be capped at RMB200 million;
Limit on the retained premiums of a
property insurance company to be removed (currently the retained
premiums shall not exceed four times of the aggregate of a property
insurance company's capital and reserve fund);
Scope of insurance fund utilisation
to be extended to equity investment, insurance asset management
products and for risk management purposes, financial
Catastrophe insurance with financial
support by the state to be formally legislated;
C-ROSS, the second generation of
solvency supervision system, to be formally reflected in the PRC
An insurance industry information
sharing platform to be established and operated centrally at the
Enhanced consumer protection
Statutory cooling off period of not
less than 20 days to be set for personal insurance contracts of
more than 1 year;
Divulgence, sale or illegal provision
of personal information by insurance companies and insurance
intermediaries to be expressly prohibited by law;
Administrative punishments to be
introduced for product advertising or explanation which leads to
misunderstanding or is untrue;
Administrative punishments to be
imposed on an insurer's failure to pay claims within the
statutory or otherwise agreed time frame;
CIRC's approval to be required
for a change of the actual controller of a shareholder who has 5%
or more share equity in an insurance company;
More interference from the CIRC if an
insurance company is considered to be at significant risk;
Amount of penalty for acts in
violation of law to be increased and the circumstances subject to
penalties to be broadened;
Insurance protection fund to be used
in case of significant risks in an insurance company;
Insurance adjuster to be
This will be yet another overhaul of the PRC Insurance Law since
2009, in order to keep pace with the fast development of the
Chinese insurance industry. It also echoes the State Council's
requirements to remove unnecessary administrative approval and to
enhance ongoing and ex-post oversight of the market as said by Li
Keqiang, the Premier of China, on various occasions.
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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Contractors and principals should ensure they have appropriate insurance coverage instead of relying on indemnity clauses.
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