Recently, CIRC revised the old Administrative Measures for Insurance Clauses and Premium of Property Insurance Company 2005 and published a new one (“New Administrative Measures”). The new one will be effected since 1st April of this year.
The New Administrative Measures were revised to be in line with the new Insurance Law which was published and effected last year and were mainly revised from three aspects: (1) completing filing system of insurance clauses and premium; (2) enhancing the management of compliance chief officer and actuary chief officer; (3) strengthening supervision of insurance companies in line with new Insurance Law. Specifically speaking, the New Administrative Measures put focus on the following points.
1. Changing the way of supervising regional products. New Administrative Measures provide that the head officer of insurance company need to file the materials of regional products directly in the CIRC. According to this stipulation, all developments and filings of products must be handled by the head office of insurance companies. On the one hand, the CIRC may use this regulation to strengthen the supervision of insurance companies and prevent insurance institutions disturb market or infringe insurance applicants or insureds by extension clauses, special agreements or adjusting premium rate in regional products. On the other hand, the CIRC may concentrate on examining the compliance, standardization and actuary of premium when all products are filed and examined only by CIRC.
2. Increasing the regulations on co-insurance products management. According to the development of insurance industry and insurance practice, the New Administrative Measures increase the regulations on clauses premium rate under circumstance of co-insurance. Other insurance company may directly use the chief insurer’s insurance clauses and premium which was filed or approved by CIRC without separate application.
3. Strengthen the management of compliance chief officer and actuary chief officer. Firstly, the New Administrative Measures require insurance companies to increase management level, establish internal accountability system and report relevant management system to CIRC. Secondly, this New Administrative Measures raise the thresholds of being a compliance chief officer. The compliance chief officer must be a formal staff of the insurance company and shall be at least a department officer in the company with more then 3 years consecutively domestic insurance or legal experiences. Thirdly, the New Administrative Measures impose some administrative penalties on insurance company for illegal acts.
4. Establishing standard products data base system. This reversion clarified that Insurance Association of China and all insurance companies shall positively promote the popularization and standardization of insurance clauses and premium rates. They shall establish an industry basic data platform and standard products data bases to improve the quality of products and to regulate the market.
After publishing the New Administrative Measures, CIRC schedules to creat a training program covering whole insurance industry to explain this new regulation and to improve the products management capability of insurance companies.