Authored by Dr. Zhan Hao (zhanhao@anjielaw.com) and Song Yiqiu from AnJie Law Firm

Reinstatement Value Insurance is applied more and more in PRC insurance market. However, the Insurance Law of the People’s Republic of China does not specifically define the Reinstatement Value or how to apply the Reinstatement Value Insurance. This article pertains to briefly analyze the application of Reinstatement Value Insurance.Continue Reading The Application of Reinstatement Value Insurance

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com); Tong Kun (tongkun@anjielaw.com); Cheng Yanan (chengyanan@anjielaw.com)

On July 25, 2013, China Insurance Regulatory Commission (“CIRC”) revealed on its official website a notice related to the establishment of the Chinese Insurance Entities Access Examination Committee (the “Committee”).

According to this notice, CIRC has set up the Committee as its internal committee for the purpose of improving the insurance market’s entry and exit mechanisms and enhancing the quality and transparence of the examination process. The CIRC has also stipulated the working rules of the Committee.

The Committee is considered a mechanism of collective deliberation among the departments of CIRC, and is responsible for approving the establishment of Chinese insurance entities. Except for those applications not accepted, suspended or withdrawn by applicants, all of the valid applications for establishing a Chinese insurance entity shall go through the Committee’s deliberation process. The Committee will decide on the fate of the application through a vote, which will express an opinion on whether to approve the application or not.Continue Reading China Insurance Regulatory Commission Sets up a New Internal Committee Responsible for Approving the Establishment of Chinese Insurance Entities

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com), Hu Guangjian (huguangjian@anjielaw.com)

After fundamental amendments in 2009, the Insurance Law of the People’s Republic of China (“Insurance Law”) better regulates the promising and fast-developing Chinese insurance industry as the main legal framework, and plays a positive role in maintaining the stability of the financial order (protecting the interests of applicants, the insured and beneficiaries) while promoting the healthy development of the Chinese insurance business. Nevertheless, the internal structure and external environment of the insurance business have undergone many changes since the 2009 Insurance Law amendments. Some fresh problems have emerged, such as the inception of the insurance liability, performance standards for the duty of explicit explanation of the clause exempting the insurers’ liability, the scope and extent for the duty of disclosure of the applicant, etc. Given the complexity of these problems and the discrepancies in understanding the Insurance Law, the judgment criteria for the aforementioned issues vary from court to court. If such problems cannot be solved promptly, judicial authority could be undermined, and the development of the insurance business could be adversely affected.

Under such circumstances, the Interpretation II of the Supreme People’s Court on Several Issues Concerning the Application of the Insurance Law of the People’s Republic of China (“Interpretation II”) was enacted by the Supreme People’s Court (“Supreme Court”). It aims to lay down some definite and feasible rules concerning the application of the general provisions in the Insurance Law.

From my point of view, particular attention should be given to the following significant portions of the judicial interpretation: Continue Reading Supreme Court Issues the Second Judicial Interpretation of PRC Insurance Law

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com), Huang Zaizai (huangzaizai@anjielaw.com), Xu Wei (xuwei@anjielaw.com), Han Rubing

The environment problem has been an important issue for Chinese government.  Surveys and conversations on China’s vibrant social-networking services show increasing public concerns over environmental pollution. Recently, the episodes related to PM 2.5 and Beijing Cough are the obvious instances. Under this backdrop, we discuss the development of environmental pollution liability insurance in China.

In 2007, the State Environmental Protection Administration (the name has been changed to Ministry of Environmental Protection of the People’s Republic of China(“MEP” since 2008),) and the China Insurance Regulatory Commission (“CIRC”) jointly issued a guide on environmental pollution liability insurance, Guidelines on Environmental Pollution Liability Insurance (MEP Issued [2007] No.189, “2007 No.189 Guidelines”). In 2007 No. 189 Guidelines, MEP and CIRC jointly encouraged local government to promote the environmental pollution liability insurance system in their own administrative regions.  It said an environmental pollution liability insurance system suitable for the national conditions of China should be preliminarily established during the period of the 11th Five-Year Plan, which is from 2006 to 2010.  Pilot and demonstration projects thereof should be carried out in major industries and regions to preliminarily establish the directory of covered enterprises or facilities of key industries based on the degree of environmental risks and the standard of compensation. Continue Reading Another Kind of Compulsory Insurance?

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com)

During the last two years, the China Insurance Regulatory Commission (CIRC) has issued several new policies for insurance proceeds investment, but the distribution is unclear at this stage, leaving insurance companies seeking guidance.

Declining profits in the insurance business is the leading incentive for CIRC to issue new investment policies for insurance proceeds. According to reports for the first three quarters of 2012, three of the four major listed insurance companies in China faced declining performances and suffered huge losses. In the third quarter, the loss of China Life Insurance Company stood at Rmb 2.207 billion ($3.54 million) and its net profit in the first three quarters declined by 56% year-on-year. The situation of China Pacific Insurance was similar, as its net profit of the third quarter was around Rmb 0.5 billion, down by 58.7% year-on-year. For New China Life Insurance, the net profit of the third quarter also declined by 15% year-on-year.Continue Reading Investing Using Insurance Proceeds

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com), Huang Zaizai (huangzaizai@anjielaw.com), Xu Wei (xuwei@anjielaw.com), Chen Xingfa (chenxingfa@anjielaw.com), Han Rubing

At the beginning of 2013, CIRC (China Insurance Regulatory Commission) and PRC Supreme Court jointly issued a notice to establish the collaboration system to link insurance litigation to mediation in some areas.

The Notice stipulates that in the experimental areas, local courts shall publish the panel list of mediation entities and mediators, and ensure the parties of litigations to choose the mediation entities and mediators at their discretion during the course of litigations. To enhance the mediation, the Notice specifically requires the local with capacity could set the special mediation office for the use of insurance dispute mediation.

Insurance Association of China and its local branches (the local association of insurance) are responsible for the setup of the insurance mediation entities, and training for mediators.Continue Reading CIRC and Supreme Court Launch ADR System for Insurance Disputes

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com)

With an increase of the aggregate amount of insurance funds and adjustments of regulatory ideas of the insurance regulator, private equity investment and real estate investment by insurance funds have become heated topics in the relevant industries. In September, 2009, China Insurance Regulatory Commission (hereinafter referred to as CIRC) promulgated Interim Measures on Real Estate Investment by Insurance Funds and Interim Measures on Private Equity Investment by Insurance Funds (hereinafter referred to as IMPEIIF),triggering considerate discussion among real estate industry, various private equity funds, industrial funds, and venture capital funds who were all looking to opportunities.

However, in the following two years, as the two Interim Measures were too principle and there has been lack of implementation rules, we can rarely find a case where insurance funds have been made successful investment in real estate and private equity.

On July 16th,2012, CIRC promulgated Circular Regarding Private Equity and real estate Investment by Insurance Funds (No.59〔2012〕by CIRC, (hereinafter referred to as the Circular ),making adjustments to and clarifying policies for private equity investment by insurance funds. The Circular also refined the two Interim Measures in the interest of insurance funds which could hardly wait for setting sail.Continue Reading AN ANALYSIS OF PRIVATE EQUITY INVESTMENT BY INSURANCE FUNDS & ITS LEGAL RISKS

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com)

Recently, a series of regulatory exposure drafts on application of insurance funds have been made by CIRC. Rule 11 of Interim Measures on Insurance Funds Trusteeship (Exposure Draft) states, unless otherwise stipulated by CIRC, the following relationships must not exist between trustee and trustor, trustee and overseas escrow agent: (1) one party directly or indirectly holds over 10% stocks of the other party; (2) a third party holds over 10% stocks of the two parties respectively. CIRC has been adhered to its concept of regulation, prohibiting the above-mentioned two equity-relations between trustee and trustor to guarantee the trustor’s independence.

In Current China, regulations regarding insurance assets trusteeship have raised widespread concern. Financial institutions as insurance assets management companies and other non-insurance assets managements companies show a keen interest in the issue and a series of relevant discussions are aroused.

Unclear Definition

Generally, trusteeship refers to an intermediary service, that is, some professional institutions, such as commercial bank, act as a third party, in accordance with relevant laws, regulations and  trusteeship contract, to undertake activities as accountant opening, custody of assets, settlement and delivery, assets estimate, accounting, investment supervision and etc, so as to protect the interests of the asset holders.Continue Reading INSURANCE FUNDS TRUSTEESHIP BY A THIRD PARTY