Last week, I received an email from an American attorney, whose client encountered some problems concerning their insurance policy, a policy purchased from two Chinese Insurance Companies. In his email, he informed me that after the occurrence of an accident which was suppose to be covered in the insurance policy, the Chinese Insurance Companies refused to compensate his client. The insurer and the insured had different understandings of the policy clause. He wanted to know whether his client could seek help from the CIRC and if so, how they should go about doing so in China. In his email, some provisions in the Guideline of the Management of the Insurance Company issued by CIRC were quoted to inform me the CIRC functioned similar to the SEC in the US. I informed him the CIRC could not help, his client should bring this case to court or if there is an arbitration clause in the policy, the dispute could be arbitrated in the arbitration commission agreed by the parties.


To be frank, as a Chinese insurance lawyer, I always receive questions from foreign clients who misunderstand the Insurance Regulatory System in China. Therefore, and due to the recent email I received, I believe it is necessary for me to write something about the CIRC and its responsibilities.

From the founding of the PRC in 1949, the People’s Bank of China has always been the regulatory authority for the insurance industry in China. The only exception was between 1952 – 1959, when the Ministry of Finance regulated the insurance industry in China. In November 1998, the China Insurance Regulatory Commission (CIRC) was established by the State Council as the regulatory authority for the insurance industry in China. The rationale was to fulfill the management goal of "separating operation and separate regulation” of the banking, securities and insurance industries.

The CIRC was regarded as a semi-ministerial institution of the State Council at its establishment, and was upgrade to ministerial institution in 2003. It currently has 15 internal departments and a nationwide network of delegated offices in various regions (local offices).
According to relevant laws and administrative regulations, the major responsibilities of the CIRC are as follows:

a. The CIRC formulates policies, strategies and plans regarding the development of the insurance industry; drafting relevant provisions, rules regarding insurance supervision, regulations and establishing guidelines for the management of insurance companies.

b. The CIRC examines and approves the establishment of insurance companies and their branches, insurance groups, insurance holding companies and insurance asset management companies in conjunction with other relevant authorities. These task include examination and approval of, the establishment of representative offices by overseas insurance organizations within the territory of the PRC, intermediaries such as insurance agencies, brokers, loss-adjustment companies and their branches; examination and approval of overseas insurance invested by domestic insurance and non-insurance organizations; examination and approval of mergers, divisions, alterations and dissolutions of insurance organizations; and participating in bankruptcy and liquidation process of insurance companies.

c. The CIRC examines and confirms the qualifications of senior managerial personnel in all insurance-related organizations and establishes the basic qualification standards for insurance practitioners.

d. The CIRC examines and approves the clauses and premium rates of insurance products relevant to public interest, statutory insurance products and newly developed life insurance products. This involves accepting for filling the insurance clauses and premium rates of other insurance products.

e. The CIRC supervises the solvency and market conduct of insurance companies according to law; manages the insurance protection fund; monitors the insurance guarantee deposits; formulating rules and regulations on insurance fund managements on the basis of the Insurance Law and relevant polices of the State; and supervises insurance fund management.

f. The CIRC supervises the business operation of public-policy-oriented insurance and statutory insurance; supervises organizational forms and operations such as captive insurance and mutual insurance; and conducts administration of institutions such as the China Insurance Association.

g. The CIRC conducts investigations into the following irregularities and imposes penalties accordingly; unfair competition and other irregularities by insurance organizations and practitioners; direct engagement or disguised engagement in insurance business by non-insurance organizations.

h. The CIRC lays down standards for the information systems of insurance industries, establishes risk-assessment, risk-warning and risk-monitoring system; compiles the statistics and report forms of the insurance industry and discloses them in accordance with relevant regulations of the state.

In addition to the CIRC, a number of other regulatory authorities are involved in the regulation of the insurance industry in China. Nearly all the government department and institutions are, to some extent, related to the regulation of the insurance industry. Comparatively speaking, the following authorities exert more influence on the insurance industry; The State Administration of Industry and Commerce (SAIC) and its local offices, particularly in respect of organizational registration, alteration and deregistration; the China Banking Regulatory Commission (CBRC) and China Securities Regulatory Commission (CSRC) and their local offices, particularly in respect of insurance funds utilization; the State Administration of Taxation (SAT) and its local offices, particularly in the respect of tax collection; the Ministry of Finance (MOFCOM) and its local offices, particularly in respect of accounting systems and standards; the State Administration of Foreign Exchange(SAFE) and its local offices, particularly in respect of business related to foreign exchange; and the Ministry of Labor and Social Securities(MOLSS) and local offices, particularly in respect of human resources