Section 1   General Provisions

  Section 2   Property Insurance Contract

    Article 1  This Law is enacted for the purpose of regulating insurance
activities, protecting the legitimate rights and interests of the parties to
insurance, strengthening supervision and control over the insurance industry
and bringing about a healthy advance in the insurance business.

    Article 2  Insurance as the term used in this Law refers to a commercial
insurance action whereby an applicant for insurance, as contracted, pays a
premium to an insurer, and the insurer is obligated to indemnify for the
property damage or loss caused by a possible accident that is agreed upon in
the contract, or to pay insurance when the insured is dead, injured or
disabled, suffers diseases or attains the age or the term agreed upon in the
contract.

    Article 3  This Law applies to all insurance activities within the
territory of the People’s Republic of China.

    Article 4  Whoever engages in insurance activities shall abide by laws and
administrative regulations and follow the principle of voluntariness, honesty
and trustworthiness.

    Article 5  Whatever engages in the commercial insurance business shall be
an insurance company which is established in accordance with this Law. No
other unit or individual may engage in the commercial insurance business.

    Article 6  Any legal person or other organization within the territory of
the People’s Republic of China, when necessary to insure within the territory,
shall make an insurance contract with an insurance company within the
territory of the People’s Republic of China.

    Article 7  Any insurance company, when conducting insurance business,
shall observe the principle of fair competition and may not engage in unfair
competition.

    Section 1  General Provisions

    Article 9  An insurance contract is an agreement whereby an applicant for
insurance and an insurer agree the relation of rights and obligations of
insurance.

    An applicant for insurance refers to a person who makes an insurance
contract with an insurer and bears the liability to pay the insurance premium,
as contracted.

    An insurer refers to an insurance company which makes insurance contracts
with applicants for insurance and bears the liability to indemnify or to pay
the insurance.

    Article 10  In making insurance contracts, an applicant for insurance and
an insurer shall follow the principles of fairness, mutual benefits, unanimity
through negotiation and voluntariness, and may not harm the social public
interests.

    With the exception of those that shall be insured as provided by laws and
administrative regulations, any insurance company and other unit may not force
other people to make insurance contracts.

    Article 11  An applicant for insurance shall have an insurable interest
in the subject-matter insured.

    Where an applicant for insurance has no insurable interest in the
subject-matter insured, the insurance contract shall be invalid.

    An insurable interest refers to a legalized interest that an applicant for
insurance has in the subject-matter.

    An insurable subject-matter insured refers to the property and its related
interests, or the life expectancy and human body which serve as insurance
objects.

    Article 12  When an applicant for insurance proposes an insurance request,
and an insurer agrees to accept the proposal, and after an agreement on
contract clauses is reached, the insurance contract shall be deemed as
concluded. The insurer shall promptly issue an insurance policy or other
certificates of insurance to the applicant for insurance, and the insurance
policy or other certificates of insurance shall clearly state the contents of
the contract agreed upon by both parties.

    By common consent through consultation, an applicant for insurance and an
insurer may also make an insurance contract by other form of written agreement
than those provided in the preceding paragraph.

    Article 13  After an insurance contract is concluded, the applicant for
insurance shall pay the insurance premium as contracted, and the insurer shall
bear the insurance liability from the time as contracted.

    Article 14  Unless this Law otherwise provides or the insurance contract
otherwise stipulates, an applicant for insurance may terminate an insurance
contract after its conclusion.

    Article 15  Unless this Law otherwise provides or the insurance contract
otherwise stipulates, an insurer may not terminate an insurance contract after
its conclusion.

    Article 16  When an insurance contract is made, the insurer shall explain
the contents of the contract clauses to the applicant for insurance and may
make inquiries of him about the conditions relating to the subject-matter to
be insured or the person to be insured, and the applicant for insurance shall
really inform thereof.

    If the applicant for insurance intentionally conceals the truth, fails
intentionally to perform the obligation of really informing, or fails to
perform the obligation of really informing due to mistake, and the case is
enough to influence the insurer to decide whether or not to agree to the
insurance or to raise the insurance premium, the insurer has the right to
terminate the insurance contract.

    Where the applicant for insurance fails intentionally to perform the
obligation of really informing, the insurer does not bear the liability to
indemnify or to pay the insurance for the insurance accident occurring prior
to the termination of the insurance contract, and does not return the
insurance premium.

    Where the applicant for insurance fails to perform the obligation of
really informing due to mistake and the failure has serious influence on the
happening of the insurance accident, the insurer does not bear the liability
to indemnify or to pay the insurance for the insurance accident occurring
prior to the termination of the insurance contract, however, may return the
insurance premium.

    An insurance accident refers to an accident that is within the limits of
insurance liability as contracted.

    Article 17  Where an insurance contract contains a clause of exemption
from liability of the insurer, the insurer shall explain it clearly to the
applicant for insurance when making an insurance contract, if the insurer
fails to explain it clearly, that clause does not take effect.

    Article 18  An insurance contract shall contain the following particulars:

    (1) name and address of the insurer;

    (2) names and addresses of the applicant for insurance and the insured, as
well as the name and address of the beneficiary to a life insurance policy;

    (3) subject-matter insured;

    (4) insurance liability and exemption from liability;

    (5) insurance period and the time of commencement of the insurance
liability;

    (6) insurable value;

    (7) insured amount;

    (8) insurance premium and mode of payment;

    (9) payment of insurance or mode of payment;

    (10) responsibility for breach of contract and settlement of disputes; and

    (11) the day, month and year on which the contract is made.

    Article 19  An applicant for insurance and an insurer may make other
stipulations on matters and items related to the insurance than those
particulars of the insurance contract as provided in the preceding article.

    Article 20  Within the term of validity of an insurance contract, the
applicant for insurance and the insurer may, upon agreement through
consultation, modify relevant contents of the insurance contract.

    Where an insurance contract is modified, the insurer shall mark notes or
attach a slip on the original insurance policy or other insurance
certificates, or the applicant for insurance and the insurer shall make a
written agreement on such modifications.

    Article 21  On learning about the happening of an insurance accident, the
applicant for insurance, the insured or the beneficiary shall notify the
insurer of the accident in time.

    An insured refers to a person whose property or body is secured by an
insurance contract and who has a claim to the insurance. An applicant for
insurance may be an insured.

    A beneficiary refers to a person who, designated by an insured or an
applicant for insurance in a life insurance contract, has a claim to the
insurance. An applicant for insurance or an insured may be a beneficiary.

    Article 22  At the time of requesting an insurer, in accordance with an
insurance contract, for indemnity or payment of insurance after the happening
of an accident insured, an applicant for insurance, an insured or an
beneficiary shall provide to the insurer relevant proofs and materials, as
many as he can, so as to determine the nature and cause of the accident and
the degree of loss of the accident incurred.

    The insurer who considers the relevant proofs and materials incomplete
according to the stipulations of the insurance contract shall notify the
applicant for insurance, the insured or the beneficiary to submit additional
relevant proofs and materials.

    Article 23  An insurer shall, after receiving a claim for indemnity or
payment of insurance from an insured or a beneficiary, make an examination and
decision in time; as for those within the realm of insurance liability, he
shall perform the liability of indemnity or payment of the insurance within 10
days after coming to an agreement on indemnity or payment of the insurance
with the insured or the beneficiary. If the insurance contract contains the
stipulations on insured amount and the period for indemnity or payment, the
insurer shall, as contracted, perform the liability of indemnity or payment of
the insurance.

    Apart from paying insurance, an insurer who fails to perform in time the
liability provided in the preceding paragraph shall indemnify the insured or
the beneficiary for the loss incurred.

    Any unit or individual may neither illegally interfere in the liability
performed by an insurer of indemnity or payment of insurance, nor restrict the
right of an insured or a beneficiary to obtain insurance.

    An insured amount refers to the maximum measure of the liability
undertaken by an insurer of indemnify or payment of insurance.

    Article 24  After an insurer receives a request made by an insured or a
beneficiary for indemnity or payment of insurance, as for those not belonging
to the realm of the insurance liability, the insurer shall issue a notice of
refusal to indemnify or to make payment of insurance to the insured or the
beneficiary.

    Article 25  An insurer who fails to determine the amount of indemnity or
payment of insurance within 60 days counted from the date on which the request
for indemnity or payment of the insurance as well as relevant proofs and
materials were received, shall pay the minimum amount which can be determined
by the proofs and materials already received; after determining eventually the
amount of indemnity or payment of the insurance, the insurer shall pay the
corresponding difference.

    Article 26  The right of claim for indemnity or payment of insurance of an
insured or a beneficiary of any other insurance than life insurance shall, if
not exercised within two years counted from the date of learning about the
happening of an insurance accident, terminate.

    The right of claim for payment of insurance of an insured or a beneficiary
of life insurance shall, if not exercised within five years counted from the
date of learning about the happening of an insurance accident, terminate.

    Article 27  If an insured or a beneficiary, in a state of that no
insurance accident happens, lies about the happening of an accident and makes
request for indemnity or payment of insurance to the insurer, the insurer has
a right to terminate the insurance contract and does not return the insurance
premium.

    If an applicant for insurance, an insured or a beneficiary intentionally
causes an insurance accident, the insurer has a right to terminate the
insurance contract, does not bear the liability of indemnity or payment of
insurance and does not return the insurance premium, unless otherwise
specified in Paragraph 1 of Article 64 of this Law.

    If an applicant for insurance, an insured or a beneficiary after the
happening of an insurance accident, fabricates a false cause of the accident
or overstates the loss by forging or altering relevant proofs, materials or
other evidences, the insurer does not bear the liability of indemnity or
payment of insurance for the part fabricated.

    An applicant for insurance, an insured or a beneficiary who commits one of
the acts mentioned in the preceding three paragraphs and causes the insurer to
make payment of insurance or expenses, shall return the payment or make
compensation.

    Article 28  That an insurer, in the form of underwriting, transfers
partially the insurance business undertaken by it to another insurer is called
reinsurance.

    At a reinsurer’s request, an original insurer shall notify the relevant
information about its self-borne liability and the original insurance to the
reinsurer.

    Article 29  A reinsurer may not demand insurance premium from an applicant
for original insurance.

    An insured or a beneficiary of the original insurance may not make a claim
for indemnity or payment of insurance on an reinsurer.

    An original insurer may not, on the grounds of that a reinsurer fails to
perform the reinsurance liability, refuse or delay performing the original
insurance liability.

    Article 30  When an insurer disputes with an applicant for insurance, an
insured or a beneficiary on the contents of an insurance contract, the
people’s court or arbitration organ shall make interpretation favorable to the
insured and the beneficiary.

    Article 31  An insurer or a reinsurer shall be liable to keep in secret
the business and property condition of an applicant for insurance, an insured
or an original insurer, which it has got to know in carrying on the insurance
business.

    Section 2  Property Insurance Contract

    Article 32  A property insurance contract refers to an insurance contract
in which the property and its related interest are the subject-matter insured.

    Property insurance contract in this Section, unless especially specified,
is abbreviated as contract.

    Article 33  The transfer of subject-matter insured shall be informed to
the insurer, and with the consent of the insurer to a continuance of
underwriting, the contract shall be modified according to law. However,
contracts of cargo transportation and contracts with otherwise stipulations
shall be excluded.

    Article 34  After the commencement of the insurance liability of an
insurance contract of cargo transportation and a voyage insurance contract of
transport means, the parties to such contracts may not terminate the contracts.

    Article 35  An insured shall abide by the regulations of the state
relating to fire fighting, safety, production operation and labour protection
so as to safeguard the safety of the subject-matter insured.

    An insurer may, according to the agreement of an contract, carry out an
inspection of the safety condition of the subject-matter insured and make a
written suggestion in time of eliminating unsafe factors and hidden dangers to
the applicant for insurance and the insured.

    Where an applicant for insurance or an insured fails to perform his due
responsibility for the safety of the subject-matter insured as contracted, the
insurer has a right to demand for increase of the insurance premium or to
terminate the contract.

    For the purpose of ensuring the safety of the subject-matter insured, an
insurer may, with the consent of the insured, take preventive safety measures.

    Article 36  If, within the period of validity of a contract, the degree of
danger of the subject-matter insured increases, the insured shall notify the
insurer in time according to the stipulations of the insurance contract, the
insurer has a right to demand for increase of the insurance premium or to
terminate the contract.

    Where an insured fails to perform the responsibility of notification
provided in the preceding paragraph, and an insurance accident occurs due to
the increase in the degree of danger of the subject-matter, the insurer does
not bear the liability for indemnity.

    Article 37  Under any of the following circumstances, unless otherwise
stipulated in the contract, an insurer shall lower the insurance premium and
return the corresponding insurance premium per diem:

    (1) the relevant circumstances on which the determination of insurance
premium rate was based have changed, and the degree of danger of the
subject-matter insured has obviously reduced; or

    (2) insurable value of the subject-matter has obviously reduced.

    Article 38  If an applicant for insurance requests to terminate a contract
prior to the commencement of an insurance liability, he shall pay a service
charge to the insurer and the insurer shall return the insurance premium. If
an applicant for insurance requests to terminate a contract after the
commencement of an insurance liability, the insurer may charge the insurance
premium due from the date of the commencement of the insurance liability to
the date of the termination of the contract, the remains shall be returned to
the applicant for insurance.

    Article 39  The insurable value of a subject-matter insured may be
agreed on by an applicant for insurance and an insurer and be stated in the
contract, and also be determined according to the actual value of the
subject-matter insured at the time that the insurance accident occurs.

    The insured amount may not exceed the insurable value; if exceeding, the
excessive part shall be invalid.

    Where the insured amount is lower than the insurable value, unless
otherwise stipulated in the contract, the insurer shall bear the liability for
indemnity according to the percentage of the insured amount to the insurable
value.

    Article 40  An applicant for double insurance shall notify each insurer of
relevant conditions of the double insurance.

    If the total insured amount of double insurance exceeds the insurable
value, the total amount of indemnity to be offered by all insurers may not
exceed the insurable value. Unless otherwise stipulated in the contract, each
insurer bears the liability for indemnity according to the percentage of the
insured amount borne by it to the total insured amount.

    Double insurance refers to insurance whereby an applicant for double
insurance makes separate insurance contracts with two or more insurers on the
same subject-matter insured, the same insurable interest and the same
insurance accident.

    Article 41  If an insurance accident occurs, the insured shall have a duty
to take as many necessary measures as possible to prevent or minimize the
losses.

    After the insurance accident occurs, the necessary and reasonable expenses
paid by the insured in preventing or minimizing the losses of the
subject-matter insured shall be borne by the insurer; the amount on the
insurer’s account shall be calculated separately from the indemnity for the
losses of the subject-matter insured, the maximum amount may not exceed the
insured amount.

    Article 42  Where a partial loss of the subject-matter insured is
sustained, the applicant for insurance may terminate the contract within 30
days after the insurer made indemnity; unless otherwise stipulated in the
contract, the insurer also may terminate the contract. The insurer who intends
to terminate the contract shall notify the applicant for insurance 15 days in
advance, and shall return the insurance premium on the undamaged part of the
subject-matter insured to the applicant for insurance after deducting the part
of the insurance premium receivable for the period from the date of the
commencement of insurance liability to the date of the termination of the
contract.

    Article 43  Where an insurer, after the happening of an insurance
accident, has made full payment of the insured amount, and the insured amount
is equal to the insurable value, all rights of the damaged subject-matter
insured shall belong to the insurer; if the insured amount is lower than the
insurable value, the insurer shall obtain a part of the rights of the damaged
subject-matter insured according to the percentage of the insured amount to
the insurable value.

    Article 44  If an insurance accident is caused by damage inflicted by a
third party to the subject-matter insured, the insurer may, from the date of
making payment of insurance to the insured, stand in the insured’s place and
exercise a right of subrogation to make a claim for indemnity on the said
third party within the limit of indemnity.

    Where an insured has obtained indemnity from a third party for the loss
after the happening of an insurance accident, as provided in the preceding
paragraph, the insurer may, when making payment of insurance, deduct the
amount which the insured has already obtained from the third party.

    The right exercised by an insurer for subrogation for indemnity, as
provided in the first paragraph, does not affect the right of claim of the
insured against the third party for compensation on the part which has not
been compensated yet.

    Article 45  If an insured, after the happening of an insurance accident
and before the insurer’s making payment of insurance, waives his right of
claim for indemnity against a third party, the insurer does not bear the
liability of indemnity for insurance.

    If an insured, after being paid insurance by the insurer, waives his claim
for indemnity against a third party without consent of the insurer, such an
act of waiving shall be deemed as invalid and void.

    If, due to the mistake of an insured, the insurer can not exercise a right
of subrogation for indemnity, the insurer may deduct and reduce the sum of
insurance indemnity accordingly.

    Article 46  Unless an insured’s family member or component person
intentionally causes an insurance accident provided in Paragraph 1 of Article
44 of this Law, the insurer may not exercise a right of subrogation for
indemnity on the family member or component person.

    Article 47  When an insurer exercises a right of subrogation against a
third party for indemnity, the insured shall provide necessary documents and
relevant information which he knows.

    Article 48  The necessary and reasonable expenses paid by an insurer and
an insured for the purpose of investigating and determining the nature and
cause of an insurance accident and the degree of losses of the subject-matter
insured shall be borne by the insurer.

    Article 49  If an insured of liability insurance causes damage to a third
party, the insurer may, in accordance with the provisions of laws or the
stipulations in the contract, directly make payment of insurance to the third
party.

    Liability insurance refers to insurance whereby the liability legally held
by an insured for indemnity to a third party is the subject-matter insured.

    Article 50  If arbitration or legal proceedings are taken against an
insured of liability insurance due to an insurance accident which causes
damage to a third party, unless otherwise stipulated in the contract, the
insurer shall bear the arbitration or proceedings expenses or costs as well as
other necessary and reasonable expenses paid by the insured.

    Section 3  Life Insurance Contract

    Article 51  A life insurance contract is an insurance contract in which
life expectancy and human body serve as the subject-matter insured.

    A life insurance contract, unless especially specified, is abbreviated as
a contract in this Section.

    Article 52  An applicant for insurance has an insurable interest in the
following persons:

    (1) principal;

    (2) spouse, children and parents; and

    (3) other family members or close relatives than those listed in the
preceding items, with whom the applicant for insurance has relations of
fostering, supporting or bringing up.

    With the exception of the provisions in the preceding paragraph, if an
insured agrees that an applicant for insurance makes a contract for him, it
shall be deemed that the applicant for insurance has an insurable interest in
the insured.

    Article 53  If the age of an insured declared by an applicant for
insurance is not true to fact, and the actual age fails to be in conformity
with the age limit as agreed upon in the contract, the insurer may terminate
the contract and return the insurance premium to the applicant for insurance
after deducting the service charge, however, excepting that the contract has
been carried out for more than two years since its conclusion.

    Because the age of an insured declared by an applicant for insurance is
not true to fact, and the applicant for insurance pays an insurance premium
less than the insurance premium payable, the