(Effective Date 1996.08.16)
CHAPTER ONE GENERAL PROVISIONS
CHAPTER TWO ESTABLISHMENT, CHANGE AND TERMINATION OF BUSINESS
OF INSURANCE AGENCIES
CHAPTER THREE BUSINESS SCOPES OF INSURANCE COMPANIES
CHAPTER FOUR ADMINISTRATION AND USE OF INSURANCE FUNDS
CHAPTER FIVE LICENSE ADMINISTRATION
CHAPTER SIX ADMINISTRATION OF INSURANCE CLAUSES AND INSURANCE
PREMIUM RATES
CHAPTER SEVEN ADMINISTRATION OF THE REPAYMENT ABILITY OF INSURANCE
COMPANY
CHAPTER EIGHT ADMINISTRATION OF INSURANCE BUSINESS
CHAPTER NINE SUPERVISION AND ADMINISTRATION
CHAPTER TEN PENALTY PROVISIONS
CHAPTER ELEVEN APPENDIX
Article 1 This set of regulations are formulated with a view to strengthening the supervision and administration of the insurance
business to promote its healthy development in accordance with the “Insurance Law of the People’s Republic of China” (hereinafter
referred to as the “Insurance Law”).
Article 2 As the supervision and administrative department of financial affairs for the State, the People’s Bank of China is responsible
for supervising the insurance business under the leadership of the State Council in the following aspects:
(1) Examine, approve and administer the establishment, change and termination of business of insurance agencies;
(2) Formulate and revise rules and premium rates for major kinds of insurance; and
(3) Supervise, administer and examine various insurance businesses and audit their accounts; check and prohibit the unauthorized
insurance agencies and illegal or disguised insurance businesses.
Insurance companies carry out their insurance business according to law shall be free from any interference of local governments,
government departments at all levels, social organizations and individuals.
Article 3 The insurance companies as referred to in this set of regulations are those set up with the approval of the People’s Bank
of China including legally registered property, personal, re-insurance and other kinds of insurance companies.
The subdivisions of insurance companies as referred to in this set of regulations are branch companies, liaison offices, business
departments and representative offices of insurance companies. Such subdivisions must not be set up in any other forms unless
otherwise authorized by the State.
The insurance agencies as referred to in this set of regulations are insurance companies and their subdivisions and other agencies
engaged in insurance business, under the approval by the People’s Bank of China.
CHAPTER TWO ESTABLISHMENT, CHANGE AND TERMINATION OF BUSINESS OF INSURANCE AGENCIES
Article 4 An insurance company should be established fully in line with the following principles:
(1) Conforms to the need of the development of the national economy;
(2) Separation of property from personal insurance;
(3) Rational distribution and fair competition; and
(4) Stresses of economic performance.
Article 5 When applying to establish an insurance company and its subdivisions, the applicant should have the following conditions:
(1) An insurance company which conducts insurance business nationwide should have a paid in cash capital of not less than
RMB500 million; an insurance company which conducts insurance business within a designated area should have a
paid in cash capital of not less than RMB200 million; an insurance company which is set up in the location of a provincial,
an autonomous regional, a municipal or a city which enjoys the provincial status in planning, government should have
a total operation fund of not less than RMB50 million.
(2) Chairman, vice-chairman, president and vice-president of an insurance company, president and vice-president of a
branch company, chief and deputy chief of a liaison office and business department (hereinafter referred to
as leading responsible persons) should acquire qualifications set by the People’s Bank of China.
(3) More than 60% of the employees of the insurance company should have engaged in insurance business and graduated from insurance
or relevant departments of universities or colleges. An insurance company which engages in life insurance business should
have at least one actuary recognized by the People’s Bank of China.
(4) An insurance company should have a definite business site and office facilities which can well accommodate its business and
staff members.
(5) Shareholders of an insurance stock company of limited-liability should acquire shares of the company in accordance with
the regulations of the People’s Bank of China in respect to investment to financial institutions.
(6) For applying for establishment of a branch company, the insurance company should have been operational for more than one
year with good performance, with an appropriate repayment ability, a complete internal management system, and without any
record of serious legal violations and major prosecutions.
(7) Other conditions as required by the People’s Bank of China.
Article 6 An insurance company may apply for the establishment of subdivisions in accordance with the increased amount of insurance
premium proceeds.
One branch company can be applied for establishment in the area of its business activities whenever its premium proceeds increase
by RMB100 million.
A branch company may apply for the establishment of one subdivision within the area of its jurisdiction whenever its insurance
premium proceeds increase by RMB50 million.
A branch company or subdivision may apply for the establishment of one liaison office within the area under its jurisdiction
whenever its insurance premium proceeds increase by RMB20 million.
An insurance company can only establish one branch company in one city.
Article 7 Subdivisions of insurance companies may apply for changing their names provided that their business performance is good.
A subdivision of a branch company may apply for changing its name into a branch company once its premium proceeds reach
RMB40 million; and a liaison office may apply for changing its name into a subdivision of a branch company once its premium
proceeds reach RMB10 million.
Article 8 The People’s Bank of China exercises two-level examination and approval for the establishment and the change of name of the insurance
companies and its subdivisions.
(1) The Head Office of the People’s Bank of China may examine and approve the establishment and the change of names of
the following agencies:
1. Establishment of insurance companies;
2. Establishment of the branch companies of insurance companies, and changes of the name of a subdivision of a branch company
into a branch company;
3. Establishment of representative offices of insurance companies; and
4. Establishment of pilot insurance agencies.
(2) Branch offices of the People’s Bank of China in provinces, autonomous regions, municipalities or cities enjoying provincial
status in planning may examine and approve the establishment and the changes of the name of the following agencies:
1. Establishment of subdivisions of branch companies of insurance companies;
2. Establishment of liaison offices and the changes of their names into subdivisions of branch companies; and
3. Establishment of business departments and the changes of their names into subdivisions of branch companies.
Before approvals to the establishment of a subdivision or change of name of a liaison office into a subdivision the matter should
be reported to the Head Office of the People’s Bank of China for the record. It shall be regarded as approved if the People’s
Bank of China does not raise any objections within 30 days beginning from the date of receiving the documents for the record.
Article 9 The establishment of an insurance company should go through stages of preparation and starting business.
Article 10 An applicant should submit the following materials in applying for the establishment of an insurance agency:
(1) Application report for the establishment of the insurance agency;
(2) Feasibility study report on the establishment of the insurance agency;
(3) The establishment plan and the background of the investors, including the time for the establishment, examining
and approving department, legal person representative, registered capital, and the financial situation of the applicant
in the latest three years;
(4) Resumes of the leading responsible persons for the establishment; and
(5) Other materials as required to be submitted by the People’s Bank of China.
Article 11 The time the People’s Bank of China needs to approve the application for the establishment of an insurance company is
three months, and if the People’s Bank of China does not approve after three months, the applicant should not submit the same
application within six months
Article 12 After approval by the People’s Bank of China, the establishment of an insurance company should be completed within
six months; if it is not completed, the original documents approving its establishment shall become invalid automatically.
In special cases, the establishing time may be extended appropriately with the approval of the People’s Bank of China, but
the time for the extension should not be longer than one year. An insurance company should not conduct any insurance
business during the time of establishment.
Article 13 In applying for starting business, an insurance company should submit to the People’s Bank of China five copies of each of
the following materials:
(1) Application report for starting the business;
(2) Certificate for capital verification issued by a capital verification agency which is approved by the People’s Bank
of China, and duplicated copies of the original vouchers of the capital funds or operation funds entering into the account
book;
(3) Resumes of the would-be leading responsible persons of the insurance company and the basic setup of the company staff members;
(4) Certificate of the ownership or the use right of the business site;
(5) Company’s articles of association which should confirm to the regulations of “The Insurance Law of the People’s Republic
of China” and “The Company Law of the People’s Republic of China”. The content of the articles of association should include
name of the agency, registered capital, business site, nature of the agency, business aims, business lines, organization
form, management, termination, liquidation and other items;
(6) Reinsurance plan; and
(7) Other materials as required to be submitted by the People’s Bank of China.
Article 14 An insurance company which has been approved to start business by the People’s Bank of China should start its business
after it goes through the formalities of registration and obtaining the business license with the administrative department
for industry and commerce on the strength of the certificate of approval and the insurance business license
Article 15 The People’s Bank of China shall check on the qualifications of the would-be leading responsible persons of an insurance company
as stipulated in the second clause of Article 5 of this set of regulations; those who have not been checked by the People’s
Bank of China or are not qualified cannot be appointed. This also applies to the change of the responsible persons.
The qualifications for the leading responsible persons of an insurance company shall be worked out separately by the People’s
Bank of China.
Article 16 The standard name of a subdivision of an insurance company should include;
(1) For a branch company: insurance company + name of the place + branch company;
(2) For a subdivision company of a branch company: insurance company + name of the place + subdivision company; and
(3) For a liaison office: insurance company + name of the place + subdivision company + liaison office or business department.
Article 17 An insurance company which has not a subdivision can only carry out business where it is registered.
Other insurance agencies can only carry out businesses in areas approved by the People’s Bank of China.
Article 18 Changes of the following items of an insurance agency should report to the People’s Bank of China for approval in advance;
(1) Increase and decrease of registered capital funds and adjustment of the structure of stock rights;
(2) Change of the organizational form of the agency;
(3) Adjust the business scope;
(4) Change of the name of the agency;
(5) Division and merge of the agency;
(6) Revise the articles of association;
(7) Change of business address; and
(8) Other changes as deemed necessary to be approved by the People’s Bank of China.
For reporting procedures and examining and approving authority of the above items, please see stipulations of Article 8
of this set of regulations.
Article 19 The termination of business of an insurance agency in accordance with the “Insurance Law” should be reported to the People’s
Bank of China for approval.
CHAPTER THREE BUSINESS SCOPES OF INSURANCE COMPANIES
Article 20 An insurance company is not allowed to both undertake personal insurance and property insurance business.
Article 21 The business scope of a property insurance company is limited to the following.
(1) Property loss insurance, liability insurance, credibility insurance and agricultural insurance; and
(2) The re-insurance of the above insurances.
Article 22 The business scope of a personal insurance company is limited to the following:
(1) Life insurance, accidental injury insurance and health insurance; and
(2) The re-insurance of the above insurances.
Article 23 The business scope of a re-insurance company is limited to the following:
(1) Accept the re-insurances of the original insurance companies in Articles 21 and 22 of this set of regulations;
(2) Accept the legal re-insurance of the domestic insurance companies with the approval of the People’s Bank of China;
(3) Handles the transfer of the re-insurance business; and
(4) Undertake international re-insurance business with the approval of the People’s Bank of China.
CHAPTER FOUR ADMINISTRATION AND USE OF INSURANCE FUNDS
Article 24 Insurance funds refer to the capital fund, guarantee fund, operational fund, various reserve funds, accumulation fund,
public welfare fund, undistributed surplus fund, insurance guarantee fund and other State authorized funds.
Article 25 The total amount of the operational fund an insurance company allocates to its branch company should not exceed 60% of its
capital plus accumulation fund.
Article 26 An insurance company which undertakes business nationwide should deposit an amount of guarantee fund at the Head Office of
the People’s Bank of China. Insurance companies which undertake business in specially designated areas should deposit guarantee
fund at the branch offices of the People’s Bank of China in provinces, autonomous regions, municipalities and cities that enjoy
the provincial status in planning, where they register.
An insurance company is not allowed to use the guarantee fund without the approval of the People’s Bank of China.
Article 27 Insurance companies which undertake insurance businesses other than life insurance should draw premature liability reserve
fund from the premiums retained by itself for the year; the amount retained and carried over should not be less than 50%
of the premium by itself in the year.
An insurance company with life insurance operations should draw the premature liability reserve fund according to the entire
net value of the valid life insurance policies.
The premature liability reserve fund of an insurance company should be true and adequate.
Article 28 An insurance company should draw reserve for outstanding losses according to the insurance indemnities or payment claimed
or thought the insurance indemnities or payment not yet claimed but the insured incidents have already occurred.
Article 29 Before distributing the after-tax profits in the year, an insurance company should draw 10% of the profits as legal accumulation
fund, and draw 5 -10% of the profits as public welfare fund. No accumulation fund should be drawn if the company’s
aggregated legal accumulation fund tops 50% of the company’s registered capital.
After drawing legal accumulation fund from the after-tax profits, the insurance company may draw arbitrary accumulation fund
according to the resolution adopted at the meeting of shareholders.
Article 30 Accumulation fund of an insurance company is used to make up for the loss of the company, expand the company’s business scope,
or to be turned into the company’s capital fund.
When a limited-liability insurance company turns the accumulation fund into its capital according to the resolution of the
meeting of the shareholders, the amount of the share of the shareholder is increased according to its original ratio of
shares. But when legal accumulation fund is turned into capital fund, the retained accumulation fund shall not be less than
25% of the company’s registered capital.
The legal public welfare fund is used for the collective welfare of the company’s employees.
Article 31 Apart from the guarantee fund, an insurance company should only deposit its savings in a big commercial bank with good capital
credibility.
Article 32 An insurance company should draw 1% of the insurance premium proceeds of the year as its insurance guarantee fund and the
drawn should be stopped whenever the guarantee fund has topped 10% of the total assets of the insurance company.
The insurance guarantee fund should be drawn separately and be deposited at a special account in the People’s Bank of China or
any commercial bank designated by the People’s Bank of China.
Article 33 The use of the insurance fund is limited to the following:
(1) Bank savings;
(2) Buy and sell government securities;
(3) Buy and sell financial securities; and
(4) Other uses as stipulated by the State Council.
CHAPTER FIVE LICENSE ADMINISTRATION
Article 34 An insurance business license, a legal person license or an insurance business license, is a legal certificate of an insurance
agency to undertake legal business.
Article 35 The People’s Bank of China is enpost_titled to design, print, issue, confiscate and revoke the insurance business licenses. Any
other units or individuals are not allowed to design, print, issue, confiscate and detain the licenses.
Article 36 An insurance business license should have an original and a duplicate to record the name of the insurance agency, its serial number,
nature and form of organization, the amount of the registered capital or the operational funds, names of the legal representative
and leading responsible person, business scope, date of issue and the term of validity.
Article 37 An insurance agency should put the original of the insurance business license at a prominent place and take good care
of the duplicate for examination. It is forbidden to forge, alter, lease, lend, transfer and sell the license.
Article 38 A license shall be changed every three years and when lost during the term, the insurance agency concerned should announce
its invalidity at a newspaper designated by the People’s Bank of China or by its branch offices within 15 days beginning from
the date of discovery of the loss, and re-apply to the original issuing department for a new one upon the presentation
of a written self-criticism and the announcement.
Article 39 The People’s Bank of China shall charge the insurance agency which gets or changes its license a certain amount of fee according
to stipulations.
CHAPTER SIX ADMINISTRATION OF INSURANCE CLAUSES AND INSURANCE PREMIUM RATES
Article 40 The insurance clauses and insurance premium rates and other documents of an insurance agency should be printed in Chinese, and
it may have an appendix in a foreign language when in need in business operations. Should there be any contradictions
between the Chinese version and the foreign language version, the Chinese version shall dominate.
Article 41 Major insurance varieties refer to those confirmed by the People’s Bank of China, which has the right to readjust the
major insurance varieties according to the market situation.
The basic clauses and insurance premium rates for the major varieties are worked out by the Head Office of the People’s Bank
of China.
Article 42 Insurance clauses and insurance premium rates of other insurance varieties worked out by an individual insurance company
should be reported to the Head Office of the People’s Bank of China for the record.
Insurance clauses and insurance premium rates of other insurance varieties formulated by the branch company of an insurance
company should be reported to the branch offices of the People’s Bank of China in provinces, municipalities, autonomous
regions or cities enjoying provincial status in planning for the record; insurance clauses and insurance premium rates
reported to the People’s Bank of China for the record shall be deemed as confirmed if the bank does not raise any different
opinions within 30 days beginning from the date of receiving the reports.
Subdivisions of the branch company of an insurance company and its liaison offices should not formulate insurance clauses
and insurance premium rates.
Article 43 In reporting the property insurance clauses and insurance premium rates, insurance companies should submit the following
documents:
(1) Five copies of the insurance clauses and insurance premium rates;
(2) Market forecast of the insured products, materials about the loss of the objects of insurance in the latest three years
and the planned insurance compensation rates, various administrative expenses and interest rates;
(3) The calculating formula and method; and
(4) Other materials as required to be submitted to the People’s Bank of China.
Article 44 In reporting life insurance clauses and insurance premium rates, the insurance company should submit the following documents:
(1) Five copies of the insurance clauses and the insurance premium rates;
(2) Market forecast of the insured products, the planned interest rates, expenses rates and profits rates and the life table used;
(3) The formula and method of calculating insurance premium rates, insurance liability reserve funds, and insurance withdrawal
funds; and
(4) Other materials as required to be submitted to the People’s Bank of China.
Article 45 While reporting the insurance clauses and premium rates of a new insurance to the People’s Bank of China for the record, insurance
companies may apply for a six-month protection period of the new insurance, and other insurance companies should not
undertake the same kind of insurance.
Article 46 Within the same province, autonomous region or municipality, various insurance companies should use a unified package of insurance
clauses, insurance premium rates and premium floating ranges of a same kind of insurance. The floating ceiling for the premium
is 30%, and the actual floating range shall be worked out by the branch offices of the People’s Bank of China in the province,
autonomous region or the municipality according to the local actual conditions.
Article 47 Records of annual compensation rates, premium rates, and profit rates of insurance companies and subdivisions should be well
kept for at least 10 years.
CHAPTER SEVEN ADMINISTRATION OF THE REPAYMENT ABILITY OF INSURANCE COMPANY
Article 48 Insurance company should have a lowest repayment ability in compatible to its business scope.
Article 49 The lowest repayment ability of an insurance company is the balance of its actual assets after deducting the actual debts
as stipulated by the People’s Bank of China.
The actual assets of an insurance company are the balance of its total assets after deducting the following items:
(1) Various advance payments except advance repayments;
(2) Deferred assets;
(3) Intangible assets;
(4) Low value and fast depreciated articles;
(5) Actual bad receivables;
(6) Cost of securities in exceed of current market price;
(7) Bad accounts in funds;
(8) One-tenth of the immovable property and fixed assets; and
(9) Other assets which cannot be changed into cash or may suffer losses in the course of changing as considered by the People’s
Bank of China.
The actual debts of an insurance company are the total assets after deducting the actually received capital fund, public accumulation
fund, public welfare fund and the balance of the undistributed profits.
Article 50 The lowest repayment ability of a property insurance company should be:
(1) not lower than RMB100 million when the self retained net premium proceeds in the preceding year being less than or
equal to RMB200 million;
(2) not lower than RMB100 million or one-third of the self retained premium expenses, which is higher, when the self retained
net premium proceeds are more than RMB200 million in the preceding year and less than or equal to RMB3 billion; and
(3) not lower than RMB1 billion or one-fourth of the self retained net premium expense, which is higher, when the self retained
net premium proceeds are higher than RMB3 billion in the preceding year.
Article 51 The lowest repayment ability of a life insurance company should be:
(1) not lower than RMB100 million when the actual debt is less than or equal to RMB300 million;
(2) not lower than RMB100 million or one-fourth of the actual debt, which is higher, when the actual debt is more than RMB300
million and less than or equal to RMB1 billion;
(3) not lower than RMB250 million or one-sixth of the actual debt, which is higher, when the actual debt is more than RMB1 billion
and is less than or equal to RMB3 billion; and
(4) not lower than RMB500 million or one-eighth of the actual debt, which is higher, when the actual debt is more than RMB3
billion.
Article 52 Should the repayment ability of an insurance company is lower than the standard set above in this set of regulations, the insurance
company should:
(1) immediately undertake re-insurance, business transfer or readjust the asset debt structure in 30 days in a way recognized
by the People’s Bank of China till it reaches the standard for the lowest repayment ability if the balance is less than
5% of the lowest repayment ability;
(2) immediately stop insurance business from the date of discovering the situation, hand in a report of self-criticism, a remedial
plan and a plan to deal with the direct responsible person to the People’s Bank of China within 10 days and undertake re-insurance
and business transfer, and ask the shareholders to add urgent capital or make up for the balance in other ways recognized
by the People’s Bank of China within 30 days if the balance is more than 5% and less than 20% of the lowest repayment ability.
(3) do the following upon decision of the People’s Bank of China if the balance is more than 20% and less than 40% of the
lowest repayment ability:
1. Overhaul and consolidate the company within a set period of time;
2. Stop part of its business;
3. Shut down; and
4. Other measures.
(4) apply to the people’s court for announcing its bankruptcy when the balance is more than 40% of the lowest repayment ability.
CHAPTER EIGHT ADMINISTRATION OF INSURANCE BUSINESS
Article 53 Insurance companies should adhere to the principles of fairness, justice reasonableness and competition in carrying out
its business activities.
Article 54 Insurance companies should not entrust insurance agents unauthorized by the People’s Bank of China to carry out its business
activities, nor accept the insurance businesses introduced by the insurance brokers unauthorized by the People’s Bank
of China.
Article 55 Insurance companies and their employees should not provide insurers, insureds and the beneficiaries with premium discounts or
other interests not stipulated in the insurance contracts.
Article 56 Written promotional materials of the insurance companies should have names of insurance companies.
Article 57 Written promotional materials should not comprise profit or dividend forecasts of insurance companies.
Article 58 Insurance personnel should not carry out business activities in areas unauthorized by the People’s Bank of China.
Article 59 After receiving claims for compensation or payment from insureds or
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