PROVISIONS ON THE ADMINISTRATION OF INSURANCE COMPANIES

The China Insurance Regulatory Commission

Provisions on the Administration of Insurance Companies

January 13,2000 ContentsChapter I General Provisions

Chapter II Insurance Institutions

Chapter III Insurance Operations

Chapter IV Terms of Insurance and Rate of Premium

Chapter V Administration and Use of Insurance Funds

Chapter VI Solvency of the Insurance Companies

Chapter VII Reinsurance

Chapter VIII Supervision and Inspection

Chapter IX Penalty Provisions

Chapter X Supplemental Provisions

Chapter I General Provisions

Article 1

These Provisions have been enacted according to the Insurance Law of the People’s Republic China (hereinafter referred to as the Insurance
Law), the Company Law of the People’s Republic of China (hereinafter referred to as the Company Law) and other relevant laws and
regulations in light of strengthening the supervision and administration of the insurance companies, maintaining the normal order
of the insurance market, protecting the lawful rights and interests of the insured and promoting the healthy development of the insurance
industry.

Article 2

The China Insurance Regulatory Commission (hereinafter referred to as CIRC) shall be the authority in charge of the commercial insurance
affairs nationwide and shall be responsible for the supervision and administration of the insurance companies according to the authorization
of the State Council.

Article 3

The insurance companies shall not be subject to the intervention of the government organizations at all levels, social institutions
or individuals in their lawful insurance activities.

Article 4

The insurance companies as mentioned in these Provisions shall refer to the commercial insurance companies of all types that have
been established and registered upon the approval of the insurance supervisory administration authority.

The branches of the insurance companies as mentioned in these Provisions shall refer to the branch companies, sub-branch companies
and business offices that have been established upon the application of the insurance companies for business operations. Unless otherwise
approved by the CIRC, the branches of the insurance companies shall not exist in any other form.

The insurance institutions as mentioned in these Provisions shall refer to the insurance companies and their branches.

Chapter II Insurance Institutions

Article 5

The establishment of insurance companies or their branches shall be subject to the approval of the CIRC.

Unless approved by the CIRC, no unit or individual shall conduct or conduct in any disguised form the commercial insurance business
within the territory of the People’s Republic of China.

Article 6

The establishment of an insurance company shall be eligible for the following principles:

1.

observing the laws, regulations and administrative rules concerning insurance;

2.

contributing to the stability of the insurance market and financial system;

3.

separation of operation between the insurance business and banking and securities businesses; separation of operation between the
property insurance business and life insurance business;

4.

rational distribution and fair competition.

Article 7

The following conditions shall be satisfied in the application for establishing an insurance company:

1.

An insurance company that is engaged in the nationwide insurance business shall have a paid-in cash capital of not less than five
hundred million yuan RMB. An insurance company that is engaged in the insurance business within a specific region shall have a paid-in
cash capital of not less than two hundred million yuan RMB.

2.

The high-ranking management personnel of the insurance company shall be eligible for the professional qualifications as required by
the CIRC.

3.

An insurance company that is engaged in the nationwide life insurance business shall consist of not less than three actuaries approved
by the CIRC. An insurance company that is engaged in the regional life insurance shall consist of not less than one actuary approved
by the CIRC.

4.

The applicant shall have business offices and facilities corresponding to the business scale and staff.

5.

The shareholders of a stock-limited insurance company shall be business corporations or other organizations as permitted for investment
by the state; the shareholders shall be eligible for the qualifications as required by the CIRC.

6.

Other conditions as required by the CIRC.

Article 8

The application for establishing an insurance company shall be accompanied by the following documents in triplicate:

1.

an application for establishment;

2.

a feasibility study report;

3.

plans for establishment;

4.

letter of intent of the investors for subscription of shares and background materials of the investors, including the nature of the
institution, type of organization, time of establishment, authority of approval, legal representative, registered capital, etc;

5.

resumes and personal statements of the person responsible for the establishment, the candidates for the chairman of the board of directors
and the general manager;

6.

other documents as required by the CIRC.

Article 9

The CIRC shall make a decision whether to approve or not to approve within six months after receiving the application. In case no
response is made in due time, the application shall be deemed as having been approved.

If the application is not approved, the applicant shall not submit similar applications with one year.

Article 10

In the event an application is approved for establishing an insurance company, the establishment shall be completed within six months.
If the establishment fails to be completed within the time limit, the original approval becomes void automatically. The time limit
for establishment may be extended for six month upon the application of the person responsible for the establishment and the approval
of the CIRC.

The preparatory organization shall not, during the period of establishment, be engaged in any insurance business.

Article 11

After the completion of the establishment, the insurance company may file an application for start of business, subject to the submission
of the following documents in triplicate to the CIRC:

1.

an application for start of business;

2.

a certification of assessment of capital issued by an assessment organization approved by the CIRC and a duplicate of the original
documents of entry into account of registered capital;

3.

resumes of the persons to be employed as executive officers, and an introduction of the setup of the departments of the company and
the composition of staff;

4.

certification of ownership or land use right to the business ground or office;

5.

articles of incorporation (draft);

6.

a three-year plan of management and scheme of reinsurance;

7.

the terms of insurance and rate of premium for the type of insurance to be engaged in;

8.

a report on the configuration of computer facilities and software;

9.

other materials as required by the CIRC.

Article 12

The insurance company may, according to the demand of business, apply for the establishment of branches. The branches shall take the
form of a subsidiary company, (central) branch company, or business office.

The head business office of the insurance company shall be responsible for the administration of the branch companies and business
offices of the place where the company is located. No subsidiary companies shall be established in the place where the head business
office is situated.

Article 13

If an insurance company, which is established with the minimum registered capital as prescribed in item 1 of article 7 , is a national
company, it may apply for establishing not more than three subsidiary companies; if it is a regional company, it may apply for establishing
not more than two subsidiary companies. Moreover, an additional registered capital of not less than 50 million yuan shall be added
to the registered capital for each application of establishing a subsidiary company or a branch on the provincial level.

If the registered capital of the applicant has reached the requirement as prescribed in the previous paragraph, it may not make corresponding
additions of registered capital.

Where a national company has a registered capital of not less than 1.5 billion yuan, and a regional company has a registered capital
of not less than 500 million yuan, and if they are adequately solvent, they may establish branch organizations without addition of
registered capital.

Article 14

The application for establishing branch organizations of an insurance company shall be filed by the head office.

Article 15

An insurance company applying for the establishment of a branch organization shall satisfy the following conditions:

1.

the establishment shall be contributory to the development of the local insurance market;

2.

the business of the head office shall have been in operation for not less than one year, and the registered capital shall be eligible
for the requirement as mentioned in Article 13 of these Provisions;

3.

the insurance company shall have sound regulatory rules, be in normal operation and adequately solvent;

4.

the insurance company shall have no record of serious violation of laws and regulations, and the organization by whom a branch organization
is to be established shall have passed the annual examination;

5.

the insurance company shall have the executive personnel that are eligible for the requirements of the CIRC;

6.

the organization previously approved has been established and has been in smooth operation;

7.

other conditions as required by the CIRC.

Article 16

An insurance company, when applying for the establishment of a branch organization, shall submit a formal application. The application
shall include the scope of business, a three-year plan for development and a market analysis, the persons to be responsible for the
establishment, a plan for the computer facilities and the planned site of business, etc.

Article 17

The CIRC shall determine the approval of the application for establishing branch organizations according to the demand of market development
and the specific conditions of the insurance company such as the premium income, solvency, business management, internal regulation,
the number and distribution of existing branch organizations, etc.

Article 18

The CIRC shall decide to approve or disapprove the application within three month after its receipt. Failure to respond within the
due time shall be deemed as approval.

If the application is denied, the insurance company shall not file similar applications within six months.

If the application is approved, the applicant insurance company shall start on the preparatory work of the branch organization. The
time for the establishment shall not exceed six month; if the establishment is not completed within the specified time, the original
approval becomes void automatically. The time for the establishment may be extended for three months, subject to the application
of the applicant insurance company and the approval of the CIRC.

Article 19

The insurance company shall, after the establishment of the branch organization, submit an application to the CIRC for start of business
and for a License for Engagement in Insurance Business.

The application for start of business shall include the completion of establishment, the scope of business, the leaders of the branch
organization, the site for business and relevant certifications, computer facilities, setup of internal departments, staff and personnel,
etc.

Article 20

Alterations concerning the following items of the insurance company shall be subject to the approval of the CIRC:

1.

amendment of the articles of incorporation;

2.

change of address;

3.

increase or decrease of registered capital;

4.

assignment of shares;

5.

change of type of organization;

6.

readjustment of scope of business;

7.

change of company post_title;

8.

split or merger;

9.

other alterations that need approval of the CIRC.

Article 21

The possession of shares by an individual shareholder of a joint stock insurance company limited (including its related companies
or on behalf of others) exceeding 10% of the registered capital shall be subject to the approval of the CIRC.

Article 22

The decisions of the board of directors of the insurance company shall be submitted, within fifteen days after the close of the meeting,
to the CIRC for record.

Article 23

The alterations of the branch organizations of an insurance company concerning the items as mentioned below shall be subject to the
approval of the CIRC:

1.

withdrawal or merger of organization;

2.

change of post_title of organization;

3.

readjustment of scope of business;

4.

change of site for business;

5.

other alterations that need the approval of the CIRC.

Article 24

The examination and administration of the credentials of the executive officers of the insurance company shall be conducted in accordance
with the relevant provisions of the CIRC.

Article 25

The insurance company shall set up a special customer service agency or a department responsible for consultation and complaints,
and shall publicize the telephone numbers for complaint.

Article 26

The joint stock insurance company shall, in the process of issuing new shares to the public, abide by the Company Law of the People’s
Republic of China and relevant provisions concerning the supervision and regulation of securities. If any of the following occurs,
the company shall not issue new shares to the public:

1.

the company has gross violations against the laws and regulations during the last three years;

2.

the previous issue of shares has not been fully subscribed and an elapse of two years has not passed;

The issue of new shares to be subscribed fully by the existing shareholders, the transfer of profit into new shares and the distribution
of common reserve fund in the form of new shares shall not be subject to the restraint as mentioned in the previous paragraph;

Article 27

The insurance license is the legitimate certification of engagement of the insurance institutions in the insurance business. The insurance
license may be classified into the Corporate License for Insurance Institution and the License for Engagement in the Insurance Business.
The Corporate License for Insurance Institution shall be the credential for the insurance company to be engaged in the insurance
business, while the License for Engagement in the Insurance Business shall be the credential for the branch organizations of the
insurance company to be engaged in the insurance business.

Article 28

A Corporate License for Insurance Institution shall be issued by the CIRC to the insurance company that has obtained the approval
for establishment, while a License for Engagement in the Insurance Business shall be issued by the CIRC to the branch organization
of the insurance company that has obtained approval for establishment. The insurance company or its branch organizations shall not
start business until it has gone through registration proceedings with the Administration for Industry and Commerce by submitting
the approval and license issued by the CIRC and has obtained the license for business.

The insurance institution shall, in the process of making alterations upon the approval, submit the authentic copy and its counterpart
of the licenses and relevant approval to the CIRC for change of licenses.

Article 29

The CIRC shall be responsible for the design, printing, issuance, withholding, cancellation and revocation of the license for insurance.
No other units or individuals shall design, withhold, cancel or revoke the license for insurance.

Article 30

The insurance institution and its branch organizations shall place the authentic copy of the insurance licenses in an eye- catching
position of the site for business and shall put the counterpart of the licenses under lock and key for further examination.

Article 31

The insurance licenses shall be changed every three years. In the event that a license is missing, the insurance institution shall,
within fifteen days starting from the day of its knowledge, publish a statement for nullification on the newspapers designated by
the CIRC and file an application to the original issuing authority for reinsurance.

Article 32

The insurance institution shall not counterfeit, alter, rent, lend, transfer or sell the insurance license.

Article 33

The CIRC shall charge a fee from the insurance institutions applying for the issuance or change of insurance licenses.

Article 34

The insurance company shall obtain the approval of the CIRC for the establishment of solely-funded companies or joint venture companies
or branch organizations overseas.

Article 35

The insurance company shall, when withdrawing an overseas insurance institution as mentioned in Article 34 , apply to the CIRC for
approval. In the event of the revocation of the insurance license or the bankruptcy of an overseas insurance institution, the insurance
company shall report to the CIRC for record.

Article 36

The insurance may set up representative offices upon the approval of the CIRC. The representative offices shall be responsible for
the consultation, liaison and coordination of relevant business of the insurance company, but shall not engage in the insurance business
operation.

The insurance company shall obtain the approval of the CIRC for the establishment of representative offices overseas.

Article 37

In the event the insurance is dissolved, withdrawn or declared bankrupt according to law, the liquidating group shall notify the creditors
within ten days after its formation and shall make a public announcement in the newspapers designated by the CIRC for at least three
times.

Article 38

The insurance company shall file an application with the CIRC for dissolution in accordance with the articles of incorporation or
the decision of the shareholders meeting, and submit the following documents in triplicate:

1.

an application for dissolution;

2.

the decision of the shareholders’ meeting;

3.

liquidation procedure;

4.

plan for the arrangement of credits and debts;

5.

the organization of the liquidating group and its leader;

6.

plan for the distribution of assets;

7.

other documents required by the CIRC.

Article 39

In the event of dissolution or withdrawn according to law, the insurance company shall terminate its business immediately, and shall
return the insurance licenses.

Article 40

A liquidating group shall be formed in the event of the dissolution or withdrawn of the insurance company by law. The liquidating
group shall entrust certified accountant firms, actuary firms and law firms for the evaluation of the credits, debts and assets of
the company.

The CIRC may supervise and guide the liquidating work.

Article 41

In the event the insurance company is dissolved or withdrawn according to law, the assets of the company shall be disposed of by way
of auction or public tendering. If the assets are transferred through negotiation, a report shall be submitted to the CIRC for record.

Article 42

In the event the insurance company is dissolved or declared bankrupt according to law, the plan for the transfer of insurance contracts
shall be submitted to the CIRC for approval.

If the insurance contract is transferred in accordance with the provisions as mentioned in the previous paragraph, the scheduled rate
of premium as prescribed in the long-term life insurance terms and conditions shall be subject to the readjustment of the CIRC.

Article 43

In the event of the dissolution of the insurance company, the shareholders of the company shall not, before the completion of liquidation,
distribute the assets of the company or obtain any benefit from the company.

Article 44

If, in the process of liquidation, the insurance company being dissolved is found to be insolvent, an application shall be filed for
bankruptcy claim, and the liquidation of assets and disposition of credits and debts shall be conducted in accordance with the bankruptcy
procedure of the insurance company, unless it is otherwise prescribed by laws, regulations or administrative rules.

Chapter III Insurance Business Operation

Article 45

A property insurance company may, upon the approval of the CIRC, engage in all or some of the businesses as mentioned below:

1.

insurance for loss of business property;

2.

insurance for loss of household property;

3.

insurance for construction projects;

4.

insurance for installation projects;

5.

insurance for freight transportation;

6.

insurance for motor vehicles;

7.

insurance for vessels;

8.

insurance for airplanes;

9.

insurance for space flight;

10.

insurance for nuclear power stations;

11.

energy insurance;

12.

insurance for statutory liabilities;

13.

insurance for general liabilities;

14.

guaranty insurance;

15.

credit insurance;

16.

insurance for the planting industry;

17.

insurance for the aquacultures industry;

18.

other insurance businesses as approved by the CIRC;

19.

the reinsurance of the insurance business as mentioned above.

Article 46

An insurance company may, upon the approval of the CIRC, engage in all or part of the following business:

1.

personal accidental injury insurance;

2.

personal fixed-term death insurance;

3.

personal endowment insurance;

4.

personal perpetual life insurance;

5.

personal annuity insurance;

6.

personal short-term health insurance;

7.

personal long-term health insurance;

8.

group accidental injury insurance;

9.

group fixed-term life insurance;

10.

group perpetual insurance;

11.

group annuity insurance;

12.

group short-term health insurance;

13.

group long-term health insurance;

14.

other personal insurance business as approved by the CIRC;

15.

reinsurance of the insurance businesses as mentioned above.

Article 47

With the approval of the CIRC, a reinsurance company may engage in all or some of the insurance businesses as mentioned below:

1.

acceptance of the outward reinsurance of the property insurance companies;

2.

acceptance of the outward reinsurance of the life insurance companies;

3.

acceptance, with the approval of the CIRC, of the legitimate outward reinsurance of the domestic insurance companies;

4.

engagement in the retrocession business;

5.

engagement in international reinsurance business.

Article 48

When applying for expansion of the scope of insurance business, the insurance company shall meet the requirements of the CIRC concerning
the registered capital, operating period, business performance, etc.

Article 49

An insurance company which, upon the approval of the CIRC and the competent foreign exchange authorities, may engage in the insurance
business, shall limit its foreign exchange business to the head office. Where a branch organization needs to engage in the foreign
exchange business, it shall apply for approval separately.

Article 50

A branch organization of the insurance company may, upon the approval of the CIRC, engage in all or some of the insurance businesses
of the insurance company.

Article 51

The insurance institutions shall engage in the insurance business within the areas as prescribed in the license for insurance.

The insurance company doing business in large and medium-sized cities shall set up corresponding branch organizations.

Article 52

Two or more insurance companies engaged in the coinsurance of a same subject matter of special risks such as large projects or satellites,
or at least one of the insurance companies has obtained approval for coinsurance in the place where the subject matter is located,
shall not be subject to the restrictions concerning the area for business.

Article 53

The insurance company may engage in the insurance of large industrial and commercial projects or large construction projects in other
places that meets one of the requirements below:

1.

the total amount of insurance of the enterprise or all the property of the project exceeds 500 million yuan;

2.

the total income of insurance premium resulting from the insurance as mentioned above exceeds 1 million yuan;

Article 54

If one of the following requirements is met, an insurance company may engage in the insurance business in other places in the form
of blanket policy:

1.

the insurance institution of the place where the investor corporation is located may engage in the insurance business of the national
key construction projects in other places in the form of blanket policy;

2.

if the corporate organization or the major object of insurance (above 50% of the amount of insurance) or the insured lies within the
business area of the insurance institution, but some of the project or the part of business not subject to independent accountability
lies in other places, the insurance institution may, while engaging in the insurance business of the local place, also engage in
the aforesaid insurance business in the form of blanket policy.

Article 55

The insured may select an insurance company for insurance upon his own will. The insurance company shall not force overtly or in disguised
form the insured to apply for insurance, unless it is otherwise prescribed by law or regulation.

Article 56

An insurance company shall not entrust an insurance agent that has not obtained the approval of the CIRC for business, nor accept
the insurance business of an insurance broker that has not obtained the approval of the CIRC, nor pay to the unlawful intermediaries
service charges, insurance commissions, or similar expenses.

Article 57

An insurance shall not engage in vicious pricing competitions for the purpose of squeezing out its rivals through abnormally low rate
of premium or expanding the scope of insurance liability.

Article 58

An insurance company shall not injure the credit and reputation of other insurance companies by counterfeiting or distributing false
facts.

An insurance company shall not attack its rivals and reap commercial profits by resorting to the judgments or penalty decisions of
the CIRC, other government departments or the court.

Article 59

An insurance company shall not, for the purpose of controlling market, induce the applicant for insurance or the insured to cancel
the contract concluded with other insurers.

Article 60

An insurance company shall not make use of the government organizations, other organizations of state power, monopolistic industries,
departments or enterprises to unlawfully squeeze out other insurance companies or impede the normal insurance business of other insurance
companies.

Article 61

An insurance company shall not provide to the insurance applicant, the insured or the beneficiary any kickback of insurance premium
or other benefit or interest in violation of the laws and regulations, nor shall the insurance company pay to the insurance agents
commissions or service charges beyond scope or standard.

Article 62

The propaganda materials of the insurance company shall be comprehensive, objective, complete and truthful. The insurance company
shall not conduct false, misleading propaganda work concerning the content of the terms of insurance or service quality by advertisement
or other means.

Article 63

The propaganda materials of the insurance company shall include the post_title of the insurance company, the telephone numbers and the
address for consultation and complaint.

The propaganda materials of the insurance company shall not predict the profit or dividends of the company or indefinite policy benefits
like participation, return of margin, etc. Insurance liabilities shall not be overstated or overstated in disguised form in the propaganda
materials.

Article 64

The insurance company shall present the exclusion clauses, clauses of discharging insurance or refunding of insurance premium as prescribed
in the insurance contract in a special way.

The insurance company shall not make partial or one-sided comparison of the terms of insurance, rate of premium with the similar clauses
or rate of premium of other insurance companies or financial organizations.

Article 65

The insurance company shall exercise supervision over the operations of its insurance agents. Any actions of the insurance agents
in violation of the laws and regulations shall be terminated or corrected immediately upon discovery.

Article 66

The associated transactions of the insurance company shall be subject to the approval of the CIRC.

Associated transactions as mentioned in the previous paragraph refer to:

1.

the insurance and reinsurance between the connected companies;

2.

the management, guaranty

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