When most Chinese regard the effect of the global financial crisis has faded, 2010 was a significant year for the Chinese insurance industry; eventful and full of challenges.

In 2010, the Chinese insurance market remains the sixth largest insurance market in the world with respect to its premium income. The value of the country’s insurance assets is over 4,000 billion RMB. Compared with the situation in 1980, when the Chinese insurance market was a completely monopolized market, there was only one insurer and the total premium income at the time was 0.46 billion RMB, the insurance industry now plays an inseparable role in the Chinese society, and causes an essentially important impact on the Chinese economy.

 For most domestic and foreign insurance undertakings in 2010, the first issue is enforcement of the newly amended Insurance Law. One of the principles embodied in the new law is to protect the interest of insured and beneficiary. To adopt this principle, which was intended to be part of the society harmonization action proposed by CIRC (Chinese Insurance Regulatory Commission), all insurers revised their policies, simplified the obscure and lengthy wordings in it and provide more options to the insured and beneficiary. The Insurance Association of China issued new policy models, and life insurers and property & casualty insurers underwrite according to the samples from the association. At this point, insurance lawyers are in urgent demand to help insurers to revise their outdated and arrogant policies.

Regulation over market behaviors became more stringent in 2010, and official supervision got more aggressive. Some insurers were fined due to appointment of a member of its management team without approval, modification to AOA without filing. The most astonishing event was prohibition of a manager of a liability insurance company, who had stolen and destroyed evidence collected by the CIRC, to enter the insurance industry.

Liability insurance products should prosper in the coming years because China has issued the Tort Liability Law which recognize punitive damages for the first time. The emergence of Director’s liability, product liability, environmental liability, and malpractice liability products are hot issues, but the absence of liability insurance product in the Dalian explosion and other pollution catastrophes indicated no optimal achievement in the near future.

New insurance business licenses were issued, but these limited licenses cannot satisfy the appetite of investor abroad and in China. This time, luck befallen on the local entrepreneurs compared to counterparts in central government level. On the other hand, the issue of the new licenses also aggravated shortage in the human resources market for legal and compliance professionals, which had gone on for many years.

Integration of different sectors was a trend in 2010. Bancassurance, financial group were mentioned frequently, and the request for reform to the regulators sounded even louder than before. Utilization of insurance funds was deregulated practically in 2010, and for the first time, insurance capital could legally be injected into real estate and PE. At the same time, some experts worry that this deregulation might worsen bubbles in the risky Chinese real estate market.

From the perspective of a Chinese insurance lawyer, 2010 means more opportunities, more challenges, and more room for innovations.