Insurance Law

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Environmental Impairment Liability Insurance (EIL insurance) is a new insurance product in China. Earlier in the history of the coverage, the insured facing an EIL loss often sought indemnification through their Commercial General Liability (CGL) policy. With the increase in EIL claims, both in frequency and severity, CGL writers, never intending the scope of their coverage to extend to EIL, quickly addressed the coverage question by excluding EIL from their CGL policies.Continue Reading Chinese Environmental Impairment Liability Insurance at a Slow Pace

At the end of February 2009, the legislative institution in Beijing promulgated the revised insurance law of People’s Republic of China. This new insurance law will be enforced in October 2009.

When the first insurance law was promulgated in 1995, the Chinese insurance market was largely monopolized, controlled by one state-owned insurer. In regard to public opinion, most Chinese considered insurance as something novel. Today, although far from mature, the Chinese insurance market is too large to neglect. For example, the market is composed of 100 insurance companies and over 2000 intermediate insurance companies, including domestic companies, subsidiaries of foreign companies and joint ventures.Continue Reading The New PRC Insurance Law – Improvement and Limitation

The development and history of health insurance in China, it is not a simple story.For many years, the Chinese medical service has been controlled by state-owned hospitals; private hospitals and pharmacies could not compete with the public medical system. As a result, the majority of citizens received their medical service through the public system and the need for health insurance products was extremely limited. Even many years after the promulgation of the Chinese Insurance Law, China lacked formal health insurance products.

After 2000, health insurance became popularized in the Chinese insurance market. The popularity was due to the reform of the medical system; which required the majority of city residents and those in the countryside to afford medical costs by themselves. Hence a demand and need for health insurance arrived in short time. Continue Reading Health Insurance and Health Care in China

Recently it was reported in the financial news that the China Insurance Regulatory Commission of the State Council (CIRC) had allocated RMB200 billion to carry out a pilot investment program for funds held by insurance companies. The RMB200 billion has been equally invested across infrastructure projects and other equity investments.

Continue Reading Insurance Funds in China Expand toward Equity Investments

Within China’s emerging legal system the question of whether an extended warranty (extended service contract ) will be subject to increased regulation under the Insurance law of China remains unanswered.

For those who are interested in undertaking a venture of this nature within the Chinese market the answer is of fundamental importance. From an entrepreneurial stance, treating the contract as a non-insurance contract will optimize business efficacy, allowing potential investors ease of market access. It would not appear practical to subject such contracts to the rigors of insurance law. On the contrary, Consumer advocates often propose and lobby for such contractual agreements to be subject to the extensive regulation surrounding insurance contracts in order to protect consumer welfare. The basis of these arguments is premised upon an extended warranty being in the interest of the contracting company and not the consumer. Such groups often argue extended warranties (extended service contract) are simply an additional mean in which to profit from an existing product.
 Continue Reading Are Extended Warranties/Extended Service Contract Considered Insurance?

Aviation Passenger Accident Insurance (APAI) in China originated in the Interim Provisions on the Compensation for the Personal Injury of Domestic Aviation Transport Passengers in 1998. In reviewing the supervision and management of APAI by the China Insurance Regulatory Commission (CIRC), we may divide the history into three stages.

During the first stage (1998-2002), APAI applied uniform provisions issued by the People’s Bank of China. At this time the CIRC was required to focus on organizing spot inspections and the strengthening of punishments concerning the violation of laws and regulations effecting control and regulation of APAI market order. The focus was a product of troubling issues, such as: the compulsive sale of APAI with tickets or other relevant insurance; counterfeit policies; and the embezzlement of premiums by agents or staff of insurance companies.
 Continue Reading Aviation Passenger Accident Insurance in China: History, Change and Administration. A Continuing Quest for Perfection

In the Chinese insurance market, it is common practice for a company to try to strengthen its supervision capabilities. In the past, special emphasis has been placed on supervision within departments – however, this is often inefficient. Therefore, financial regulatory institutions are beginning to focus on preventing risk by promoting internal supervisory mechanisms and the principle of compliance management.

Since Ping An Insurance Group initiated the establishment of the “Law & Compliance Department” in 2004 and theChina Insurance Regulatory Commission (CIRC) issued the Guidelines of Standardizing Governance Structure of Insurance Companies in January 2006 which state that insurance companies are required to establish a mechanism of compliance management to strengthen the inspection and evaluation of compliance, other domestic insurance companies have followed suit. In 2007, CIRC issued the formal Guidelines for the Compliance Management of Insurance Companies (hereafter Compliance Guidelines) which provide direct policy guidelines for the establishment of departments of compliance.
 Continue Reading CIRC Compliance Guidelines: Implementation for Chinese Insurance Companies

The Chinese legislator recently published the draft of the Chinese Insurance Law (revised). The draft is inherently different from the present Insurance Law of the People’s Republic of China. Therefore, the draft should be deemed as new rather than revised.

The current Insurance Law has aroused fierce and serious criticism since its promulgation in 1995 and subsequent revision in 2002. Those who are insured, insurers, brokers, agents, loss adjusters and regulators are not satisfied with the current regulatory position surrounding the Insurance Law. The reasons which stem from this dissatisfaction are multiple.
 Continue Reading Just Move, A Big Step-comments on the draft of new insurance law of China

On July 8th 2008, the China Insurance Regulatory Commission (CIRC) promulgated the Guidelines on the Operation of the Board of Directors of Insurance Companies (the Guidelines) whose provisions are, compared with the Guiding Opinion on Regulating the Corporate Governance of Insurance Companies promulgated in 2006, more specific in many aspects such as in the qualification of directors, the operation of directors board and its professional committee, secretary and assistant institutions of the directors board and corporate governance reports. The Guidelines, together with the Interim Measures for the regulation of Insurance Companies’ Independent Directors and the Interim Measures for the regulation of Affiliate Transaction of Insurance Companies, compose the primary system regulating the board of directors of insurance companies.Continue Reading Who “Directs” the Directors of Chinese Insurance Companies

The issue of “bad faith” has plagued the insurance market in China and has proven to be a major hurdle in the Chinese insurance market’s development. Below is a case which provides insight into the presence of bad faith at the local level.

In February 2009, a defendant (the insured) was sentenced to eight months…