Insurance Law

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The regulation of corporate governance structures is the latest and most important development to the international regulation. For the purpose to strengthen the insurance industry in China and in the light of international experience, China Insurance Regulatory Commission (CIRC) promulgated the Guiding Opinion on Regulating the Insurance Company Corporate Governance Structure ( Trial Implementation) (Guiding Opinion on 5 January 2006. This Guiding Opinion is applicable to shareholding insurance companies. Other insurance companies and insurance asset management companies may also refer to this Guiding Opinion for implementation. The main contents of this Guiding Opinion are as follows: 1),strengthen majority shareholder obligations; 2), strengthen Board of Directors construction functions; 3),ensure Supervisory Board Function;4) regulate management level operation; 5),strengthen affiliated transaction and information disclosure management; and 6) corporate governance structure supervision and administration.

Majority shareholder having significant influence on an insurance company’s operation and management must have excellent financial conditions and continuous investment capabilities, must support the insurance company in improving its solvency, and must not use its special positions to damage the lawful rights and interest of the insurance company, the insured, the minority shareholders and other interest parties.

Where the insurance company’s shareholders are in an affiliate relationship with one another, they must take the initiative to report this to the Board of Directors. The insurance company must report its shareholders’ affiliated relationship to CIRC on a timely basis.

Continue Reading Regulations of Corporate Governance Structure of Insurance Companies

Often within my usual work I have to review some Partnership Agreements and Cooperation Agreements between my Chinese clients and their foreign investors. A reoccurring problem that worries my clients and their foreign investors, which results in me having to explain the Chinese regulations, is that in their Partnership Agreement the foreign investors want to send their personnel to assume positions at the Chinese Insurance Company they have invested in. In my personnel opinion, it is not an extreme request for them to administrate or manage the insurance institution to some extent. This said, it still has to be made clear that there are some limitations and qualification requirements, imposed by (CIRC), for the personnel to hold certain positions in Insurance Institutions. In relation to this problem, there are some provisions promulgated by CIRC for reference, such as the Administration of Appointment Qualification for Directors and Senior Management Personnel of Insurance Companies Provisions, the Administration of Appointment Qualification for Senior Management Personnel of Insurance Companies Provisions, and some Amendment Decisions.Continue Reading The Appointment Qualification for the Senior Management Personnel in Insurance Institutions

Recently, for the purpose of coordinating with the Medical System Reform in China, China Insurance Regulatory Commission (CIRC) issued the Opinions on Implementing the Medical Reform and Actively Engaging in Establishment of the Multilayer Medical Guarantee System (hereinafter referred to as Opinions) on June 11, 2009. For the first time this has stipulated eight requirements for the commercial insurance institutions that are engaged in various medical guarantees administrative services.Continue Reading CIRC’s New Opinion Speed Up the Medical System Reform

The new insurance product: consumption credit insurance for individuals will be issued first time in Beijing.

Based on individual credit, clients will be granted small amount of loan from banks in 3 to 4 days without any guarantors and mortgages. Ping An Insurance Limited has received the permission to issue this consumption credit insurance in over 20 areas, such as Beijing, Tianjin and Zhejiang Province.Continue Reading Consumption Credit Insurance: now in Beijing

With foreign investors testing ingenious ways in which to circumvent the regulatory burdens and scrutiny associated with a foreign owned Chinese insurance company, an interesting question has come to light; is it possible for an insurance policy between a domestic insurer and a Chinese manufacture to have a foreign element. The foundation of this question is rooted in the uncertainty surrounding the enforcement and validity of an arbitration clause designating a foreign jurisdiction for a case which is purely domestic (China).

Continue Reading A Domestic Insurer, a Chinese Manufacture, a Foreign Element?

Travel agencies legitimately established in mainland should buy compulsory travel agency liability insurance. This is one article in draft of the Administrative Measures for Liability Insurance of Travel Agencies (Draft for Comment) promulgated by National Tourism Administration of PRC and China Insurance Regulatory Commission for public comments.

According to the draft regulation, the compulsory travel agency liability insurance should cover the compensation liability incurred by the travel agency during the trip because of the death and injury of the clients and their property damages. It should also cover travel agency’s liability to the people they employed when they are injured or their property is damaged. The insurance should cover liability caused by travel agency’s negligence or fault; by accidents and based on what the People’s Court or arbitration institution held on the judgment.

Continue Reading Development on Liability Insurance of Travel Agencies

According to relevant provisions under Chinese Law, a “foreign-invested insurance company” may take the following forms;

1) A joint venture insurance company in China established by a foreign insurance company and a Chinese company or enterprise;
2) A foreign insurance company solely owned and operated by a foreign insurance company;
3) A branch company of a foreign insurance company in China.
 Continue Reading Foreign-invested Insurance Companies in China

A representative office in China of a foreign insurance company is in fact not a true commercial presence in China because a representative office and its employees are only allowed to conduct non-business activities in Chinese insurance market such as liaison, market research and are prevented from conducting or engaging in any business activities and providing insurance services. On the other hand, if an insurance company has a commercial presence in China, this means it can provide insurance services in China. But establishing a commercial presence such as foreign invested insurance company by a foreign insurance in China shall be subject to have a representative office in China for over two years. Therefore, setting up a representative office in China is the first step for a foreign insurance company who want to establish a commercial presence in China.

Continue Reading Procedures for the Establishment of Foreign Insurance Companies’ Representative Offices in China

The insurance market in China is growing at an unprecedented rate. Cultural norms towards insurance have begun to change regardless of the intangible nature of insurance and a substantial portion of this growth has arrived through foreign investment. Foreign investors continue to increase their share of the Chinese market regardless of the current economic downturn. Compared with other financial sectors, the insurance market is the most accessible in China, however, such investors will ultimately face fresh challenges from the banking sector due to the present state of credit markets and the regulatory environment surrounding Chinese insurance businesses is uninviting. In order for potential investors to gauge prospective returns, one must hold an understanding of the hurdles associated with such forms of investment on the Mainland of China. The following will attempt to outline some of the major hurdles faced by current and prospective investors in China’s insurance market. By no means is this account to be exhaustive, rather its purpose is to provide general insight and awareness. Given the importance of due-diligence, considering the past errs within the market, current and prospective investors must be aware of the current regulatory environment.Continue Reading Major Hurdles Of Foreign Owned Insurance Businesses in China

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.

Continue Reading The CIRC and Its Local Offices: Functions and Responsibilities