Insurance Law of China (2015 Amendment)

· Document Number：Order No. 26 of the President of the People's Republic of China

· Area of Law： Insurance

· Level of Authority： Laws

· Date issued：04-24-2015

· Effective Date：10-01-2009

· Status： Effective

· Issuing Authority： Standing Committee of the National People's Congress

Insurance Law of China
(Adopted at the 14th session of the Standing Committee of the Eighth National People's Congress on June 30, 1995; amended for the first time at the 30th session of the Standing Committee of the Ninth National People's Congress on October 28, 2002, according to the Decision on Amending the Insurance Law of the People's Republic of China; revised at the 7th session of the Standing Committee of the Eleventh National People's Congress on February 28, 2009; amended for the second time at the 10th session of the Standing Committee of the Twelfth National People's Congress on August 31, 2014, according to the Decision of the Standing Committee of the National People's Congress on Amending Five Laws Including the Insurance Law of the People's Republic of China; and amended for the third time in accordance with the Decision on Amending Five Laws Including the Metrology Law of the People's Republic of China adopted at the 14th Session of the Standing Committee of the Twelfth National People's Congress on April 24, 2015)
Contents
Chapter I General Provisions
Chapter II Insurance Contracts
Section 1 General Rules
Section 2 Personal Insurance Contracts
Section 3 Property Insurance Contracts
Chapter III Insurance Companies
Chapter IV Rules of Insurance Operations
Chapter V Insurance Agents and Insurance Brokers
Chapter VI Supervision and Administration of the Insurance Sector
Chapter VII Legal Liability
Chapter VIII Supplemental Provisions
Chapter I General Provisions
Article 1 This Law is enacted for the purpose of regulating insurance activities, protecting the legitimate rights and interests of the parties to insurance activities, strengthening the supervision and administration of the insurance sector, maintaining the social and economic order and public interest, and promoting the sound development of the insurance sector.
Article 2 In this Law, the term “insurance” means the commercial insurance activities where an insurance applicant pays an insurance premium to an insurer under an insurance contract and the insurer pays indemnity for the property loss caused by the occurrence of a potential incident specified in the insurance contract or pays insurance benefits when the insured dies, becomes disabled or sick or reaches a specified age, time limit or any other condition specified in the contract.
Article 3 All insurance activities carried out within the territory of the People's Republic of China shall be governed by this Law.
Article 4 Whoever carries out insurance activities must abide by the laws and administrative regulations and defer to social ethics, and shall not damage the public interest.
Article 5 The parties to insurance activities shall follow the principle of good faith in their exercise of rights and performance of obligations.
Article 6 Insurance business shall be carried out by insurance companies formed according to this Law or other insurance organizations as prescribed by laws and administrative regulations. No other entity or individual shall carry out insurance business.
Article 7 Legal persons and other organizations within the territory of the People's Republic of China which need domestic insurance shall take out insurance from insurance companies within the territory of the People's Republic of China.
Article 8 The insurance, banking, securities and trust sectors shall be segregated in operations and administration, and insurance companies, securities institutions and trust institutions shall be formed separately, except as otherwise specified by the state.
Article 9 The insurance regulatory body under the State Council shall be responsible for the supervision and administration of the insurance sector according to the law.
The insurance regulatory body under the State Council may set up local offices as needed for performing its duties. The local offices shall perform the duties of supervision and administration as authorized by the insurance regulatory body under the State Council.
Chapter II Insurance Contracts
Section 1 General Rules
Article 10 An insurance contract means an agreement under which the insurance applicant and insurer agree upon the insurance rights and obligations.
An insurance applicant means a person who enters into an insurance contract with an insurer and performs the obligation of paying an insurance premium under the insurance contract.
An insurer means an insurance company which enters into an insurance contract with an insurance applicant and is liable for paying indemnity or insurance benefits under the insurance contract.
Article 11 An insurance contract shall be concluded upon agreement between both parties after consultation, and the rights and obligations of both parties shall be determined according to the principle of fairness.
An insurance contract shall be concluded voluntarily, unless the insurance is mandated by a law or administrative regulation.
Article 12 An applicant for personal insurance shall, when entering into an insurance contract, have an insurable interest in the insured.
The insured in property insurance shall have an insurable interest in the subject matter insured when an insured incident occurs.
Personal insurance shall be a type of insurance which takes the life and body of human beings as the subject matter insured.
Property insurance shall be a type of insurance which takes property and interests related thereto as the subject matter insured.
An insured means a person whose property, life or body is covered by an insurance contract and who is entitled to claim the insurance money. An insurance applicant may be the insured.
An insurable interest means a legally recognized interest owned by an insurance applicant or insured in the subject matter insured.
Article 13 An insurance contract shall be formed after the insurance applicant applies for insurance and the insurer agrees to underwrite the insurance. The insurer shall issue an insurance policy or any other insurance certificate to the insurance applicant in a timely manner.
The insurance policy or any other insurance certificate shall expressly state the provisions of the contract reached by both parties. Both parties may agree to state the provisions of the contract between them in any other written form.
A legally formed insurance contract shall become effective upon formation. The insurance applicant and insurer may attach a condition or time limit for the effectiveness of the contract.
Article 14 After an insurance contract is formed, the insurance applicant shall pay an insurance premium as agreed upon, and the insurer shall start to assume the insurance liability from the time as agreed upon.
Article 15 After an insurance contract is formed, the insurance applicant may, but the insurer may not, rescind the contract, except as otherwise provided for by this Law or as otherwise agreed upon in the insurance contract.
Article 16 Where the insurer inquiries about the subject matter insured or about the insured when entering into an insurance contract, the insurance applicant shall tell the truth.
Where the insurance applicant fails to perform the obligation of telling the truth as prescribed in the preceding paragraph intentionally or for gross negligence, affecting the insurer's decision on whether to underwrite the insurance or raise the insurance premium, the insurer shall have the right to rescind the insurance contract.
The right to rescind an insurance contract as prescribed in the preceding paragraph shall be annulled 30 days after the insurer knows the cause of rescission. Two years after an insurance contract is concluded, the insurer may not rescind the contract; and where an insured incident occurs, the insurer shall pay indemnity or insurance benefits.
Where the insurance applicant intentionally fails to perform the obligation of telling the truth, the insurer shall not be liable for paying indemnity or insurance benefits for an insured incident which occurs before the contract is rescinded, and shall not refund the insurance premium.
Where the insurance applicant fails to perform the obligation of telling the truth for gross negligence, materially affecting the occurrence of an insured incident, the insurer shall not be liable for paying indemnity or insurance benefits for an insured incident which occurs before the contract is rescinded, but shall refund the insurance premium.
Where the insurer knows the truth which the insurance applicant fails to tell when they enter into an insurance contract, the insurer shall not rescind the contract; and if an insured incident occurs, the insurer shall pay indemnity or insurance benefits.
An insured incident means an incident within the insurance coverage as agreed upon in an insurance contract.
Article 17 Where an insurance contract is concluded using the standard clauses of the insurer, the insurer shall provide an insurance policy with the standard clauses attached and explain the contents of the contract to the insurance applicant.
For those clauses exempting the insurer from liability in the insurance contract, the insurer shall sufficiently warn the insurance applicant of those clauses in the insurance application form, the insurance policy or any other insurance certificate, and expressly explain those clauses to the insurance applicant in writing or verbally. If the insurer fails to make a warning or express explanation thereof, those clauses shall not be effective.
Article 18 An insurance contract shall include the following:
(1) The name and domicile of the insurer.
(2) The names and domiciles of the insurance applicant and insured and the name and domicile of the beneficiary in the case of personal insurance.
(3) The subject matter insured.
(4) The insurance liability and liability exemption.
(5) The duration of insurance and the time of commencement of insurance liability.
(6) The insured amount.
(7) The insurance premium and the payment method.
(8) The method for paying indemnity or insurance benefits.
(9) The liabilities for breach of contract and the resolution of disputes.
(10) The year, month and date when the contract is concluded.
The insurance applicant and insurer may agree upon other insurance-related matters in the insurance contract.
A beneficiary means a person designated by the insured or insurance applicant in a personal insurance contract to be entitled to claim the insurance money. An insurance applicant or insured may be a beneficiary.
An insured amount means the upper limit of the indemnity or insurance benefits which the insurer is liable to pay.
Article 19 The following clauses in an insurance contract which is concluded using the standard clauses of the insurer shall be null and void:
(1) A clause exempting the insurer from any legal obligation or aggravating the liability of the insurance applicant or insured.
(2) A clause excluding any legal right of the insurance applicant, insured or beneficiary.
Article 20 The insurance applicant and insurer in an insurance contract may modify the contract upon consultation.
To modify an insurance contract, the insurer shall endorse the insurance policy or any other insurance certificate or attach an approval slip thereto, or the insurance applicant and insurer shall enter into a written agreement on the modification.
Article 21 After knowing the occurrence of an insured incident, the insurance applicant, insured or beneficiary shall notify the insurer in a timely manner. Where the insurance applicant, insured or beneficiary fails to do so intentionally or for gross negligence, which makes it difficult to determine the nature, cause, degree of damage, etc. of the insured incident, the insurer need not pay indemnity or insurance benefits for the undeterminable part, unless the insurer has known or should have known the incident in a timely manner through any other channel.
Article 22 After an insured incident occurs, the insurance applicant, insured or beneficiary claiming indemnity or insurance benefits against the insurer under the insurance contract shall provide the insurer with all available certificates and materials related to the determination of the nature, cause, degree of damage, etc. of the incident.
If the insurer deems that the relevant certificates and materials are incomplete according to the contract, it shall notify, in a timely manner and at one time, the insurance applicant, insured or beneficiary of all additional certificates and materials to be provided.
Article 23 After receiving an insured's or beneficiary's claim for paying indemnity or insurance benefits, the insurer shall adjust the claim in a timely manner. If the circumstances are complex, the insurer shall complete the adjustment within 30 days, unless it is otherwise agreed upon in the insurance contract. The insurer shall notify the insured or beneficiary of the adjustment result. For a claim which falls within the insurance coverage, the insurer shall perform the obligation of paying indemnity or insurance benefits within 10 days after reaching an agreement on payment of indemnity or insurance benefits with the insured or beneficiary. If the insurance contract provides for a time limit for payment of indemnity or insurance benefits, the insurer shall perform the obligation of paying indemnity or insurance benefits as agreed upon.
Where the insurer fails to perform the obligation as prescribed in the preceding paragraph, it shall, in addition to paying the insurance money, compensate the insured or beneficiary for any loss suffered therefrom.
No entity or individual shall illegally intervene in an insurer's performance of the obligation of paying indemnity or insurance benefits or restrict an insured's or beneficiary's right to insurance money.
Article 24 After completing the adjustment under Article 23 of this Law, for a claim which does not fall within the insurance coverage, the insurer shall, within three days after completing the adjustment, send a notice of its refusal to pay indemnity or insurance benefits to the insured or beneficiary, with reasons.
Article 25 Where an insurer cannot determine the amount of indemnity or insurance benefits to be paid within 60 days after receiving a claim for indemnity or insurance benefits and the relevant certificates and materials, it shall first pay the amount which may be determined according to the available certificates or materials, and after it finally determines the amount of indemnity or insurance benefits to be paid, pay the difference.
Article 26 The time limitation for an insured or beneficiary in insurance other than life insurance to claim indemnity or insurance benefits against the insurer shall be two years, which shall be counted from the day when the insured or beneficiary knows or should have known the occurrence of the insured incident.
The time limitation for an insured or beneficiary in life insurance to claim indemnity or insurance benefits against the insurer shall be five years, which shall be counted from the day when the insured or beneficiary knows or should have known the occurrence of the insured incident.
Article 27 Where the insured or beneficiary lies about the occurrence of an insured incident which actually never occurs, and claims indemnity or insurance benefits against the insurer, the insurer shall have the right to rescind the insurance contract and not to return the insurance premium.
Where the insurance applicant or insured intentionally causes an insured incident, the insurer shall have the right to rescind the insurance contract, not to pay indemnity or insurance benefits, and subject to Article 43 of this Law, not to refund the insurance premium.
Where, after the occurrence of an insured incident, the insurance applicant, insured or beneficiary fabricates the cause of incident or exaggerates the degree of damage by forging or altering the relevant certificates or materials or any other evidence, the insurer shall not be liable to pay indemnity or insurance benefits for the false part.
Where the insurance applicant, insured or beneficiary commits any of the conduct as prescribed in the preceding three paragraphs, causing the insurer's payment of insurance money or expenses, the insurance applicant, insured or beneficiary shall refund the insurance money or compensate the insurer for expenses.
Article 28 Reinsurance means that an insurer transfers a portion of its underwritten insurance business to other insurers in the form of cede insurance.
At the request of the reinsurer, the cedant shall provide in writing the reinsurer with information on its own liabilities and the original insurance.
Article 29 No reinsurer shall require the original insurance applicant to pay an insurance premium.
Neither the insured nor the beneficiary in the original insurance may claim indemnity or insurance benefits against the reinsurer.
No cedant shall refuse or delay the performance of its original insurance liability under the pretext that the reinsurer fails to perform the reinsurance liability.
Article 30 Where there is any dispute between the insurer and the insurance applicant, insured or beneficiary over any clause of an insurance contract concluded using the standard clauses of the insurer, the clause shall be interpreted as commonly understood. If there are two or more different interpretations of the clause, the people's court or the arbitral institution shall interpret the clause in favor of the insured and beneficiary.
Section 2 Personal Insurance Contracts
Article 31 A insurance applicant shall have an insurable interest in any of the following persons:
(1) Self.
(2) Spouse, children, and parents of the insurance applicant.
(3) Family members or close relatives other than those specified in the preceding paragraph with whom the insurance applicant has a relationship of support.
(4) Workers who have labor relationships with the insurance applicant.
In addition to the preceding paragraph, if the insured agrees that the insurance applicant enters into an insurance contract for the insured, the insured applicant shall be deemed to have an insurable interest in the insured.
Where the insurance applicant does not have an insurable interest in the insured when entering into an insurance contract, the contract shall be null and void.
Article 32 Where the insurance applicant falsely declares the age of the insured and the real age of the insured fails to meet the age requirement in the insurance contract, the insurer may rescind the contract, and refund the cash value of the insurance policy as agreed upon in the contract. An insurer's exercise of the right to rescind an insurance contract shall be subject to paragraphs 3 and 6 of Article 16 of this Law.
Where the insurance applicant falsely declares the age of the insured and thus pays an insurance premium less than the due insurance premium, the insurer shall have the right to correct and require the insurance applicant to make up the unpaid insurance premium or to pay insurance money according to the proportion between the actually paid insurance premium and the due insurance premium.
Where the insurance applicant falsely declares the age of the insured and thus pays an insurance premium more than the due insurance premium, the insurer shall refund the overpaid insurance premium to the insurance applicant.
Article 33 No insurance applicant shall take out any personal insurance in which insurance money shall be paid conditioned upon the death of the insured for a person without the civil conduct capacity, and no insurer shall underwrite such insurance.
Parents who take out personal insurance for their underage children shall not be subject to the preceding paragraph. However, the total insurance money paid for the death of the insured shall not exceed the limit as prescribed by the insurance regulatory body under the State Council.
Article 34 Where an insurance contract takes death as the condition for payment of insurance money, and the insured has not consented thereto and recognized the insured amount, the contract shall be null and void.
An insurance policy issued under a contract which takes death as the condition for payment of insurance money shall not be transferred or pledged without the written consent of the insured.
Parents who take out personal insurance for their underage children shall not be subject to paragraph 1 of this Article.
Article 35 An insurance applicant may pay an insurance premium to an insurer in a lump sum or in installments as agreed upon in the insurance contract.
Article 36 Where an insurance contract provides that the insurance premium shall be paid in installments, and after paying the first installment of the insurance premium, the insurance applicant fails to pay the current installment of the insurance premium beyond 30 days after the day when the insurer sends a payment notice or beyond 60 days after the day as agreed upon, the validity of the contract shall be suspended, or the insurer may reduce the insured amount according to the contract, except as otherwise provided for by the contract.
Where an insured incident occurs to the insured within the time limit mentioned in the preceding paragraph, the insurer shall pay insurance money according to the contract but may deduct the underpaid insurance premium from the insurance money.
Article 37 Where the validity of an insurance contract is suspended under Article 36 of this Law, the validity of the contract may resume after the insurer and insurance applicant reach an agreement upon consultation and the insurance applicant makes up the underpaid insurance premium. However, if both parties fail to reach an agreement two years after the validity of the contract is suspended, the insurer shall have the right to rescind the contract.
If the insurer rescinds the contract under the preceding paragraph, it shall refund the cash value of the insurance policy as agreed upon in the contract.
Article 38 No insurer shall resort to litigation to require an insurance applicant to pay any premium for life insurance.
Article 39 The beneficiary in personal insurance shall be designated by the insured or insurance applicant.
The insurance applicant shall obtain the consent of the insured when designating the beneficiary. Where the insurance applicant takes out personal insurance for any worker who has a labor relationship with the insurance applicant, the insurance applicant shall not designate any person other than the insured or a close relative thereof as the beneficiary.
For an insured without the civil conduct capacity or with limited civil conduct capacity, his or her guardian may designate the beneficiary.
Article 40 The insured or insurance applicant may designate one or more beneficiaries.
If there are two or more beneficiaries, the insured or insurance applicant may determine the sequence and shares of the beneficiaries; if the shares of the beneficiaries are not determined, all beneficiaries shall equally enjoy the beneficiary right.
Article 41 The insured or insurance applicant may change a beneficiary but shall notify the insurer in writing. The insurer shall endorse the insurance policy or any other insurance certificate or attach an approval slip thereto after receiving the written notice.
To change a beneficiary, the insurance applicant must obtain the consent of the insured.
Article 42 After the death of the insured, under any of the following circumstances, the insurance money shall be deemed the legacy of the insured, and the insurer shall perform the obligation of paying insurance money according to the Succession Law of the People's Republic of China:
(1) No beneficiary is designated or the beneficiary is not clearly designated and cannot be determined.
(2) The designated beneficiary is survived by the insured and there is no other beneficiary.
(3) The designated beneficiary legally loses or waives the beneficiary right and there is no other beneficiary.
Where both the beneficiary and the insured die in the same incident, and it is impossible to determine their sequence of death, the beneficiary shall be presumed dead first.
Article 43 Where the insurance applicant intentionally causes the death, injury, disability or illness to the insured, the insurer shall not be liable to pay insurance money. If the insurance applicant has paid insurance premium for two full years or more, the insurer shall return the cash value of the insurance policy to other right holders as agreed upon in the contract.
Where the beneficiary intentionally causes the death, injury, disability or illness to the insured or attempts to murder the insured, the beneficiary shall lose the beneficiary right.
Article 44 Where the insured in a contract which takes death as the condition for paying insurance money commits suicide within two years after the contract is formed or the validity of the contract resumes, the insurer shall not be liable to pay insurance money, unless the insured is a person without the civil conduct capacity at the time of suicide.
Where the insurer is not liable to pay insurance money under the preceding paragraph, it shall refund the cash value of the insurance policy as agreed upon in the contract.
Article 45 Where the insured is injured, disabled or dead for his or her intentional commission of a crime or resistance to any legally taken criminal compulsory measure, the insurer shall not be liable to pay insurance money. If the insurer has paid the insurance premium for two full years or more, the insurer shall refund the cash value of the insurance policy as agreed upon in the contract.
Article 46 For the occurrence of an insured incident such as death, injury, disability or illness caused to the insured by the conduct of a third party, after the insurer pays insurance money to the insured or beneficiary, the insurer shall have no right to recover the money from the third party, but the insured or beneficiary shall still have the right to claim compensation against the third party.
Article 47 Where the insurance applicant rescinds the contract, the insurer shall refund the cash value of the insurance policy as agreed upon in the contract within 30 days from the day of receipt of the notice of contract rescission.
Section 3 Property Insurance Contracts
Article 48 The insured which does not have an insurable interest in the subject matter insured when an insured incident occurs shall not claim indemnity against the insurer.
Article 49 Where the subject matter insured is assigned, the assignee shall succeed to the rights and obligations of the insured.
Where the subject matter insured is assigned, the insured or the assignee shall notify the insurer in a timely manner, except for a cargo transportation insurance contract or any contract as otherwise agreed upon.
If the assignment of the subject matter insured greatly raises the degree of peril, the insurer may, within 30 days of receipt of the notice as mentioned in the preceding paragraph, increase the insurance premium or rescind the contract as agreed upon in the contract. If the insurer rescinds the contract, it shall refund the collected insurance premium to the insurance applicant after deducting the receivable part from the day of commencement of insurance liability to the day of contract rescission.
Where the insured or assignee fails to perform the notification obligation prescribed in paragraph 2 of this Article and an insured incident occurs because the assignment greatly raises the degree of peril of the subject matter insured, the insurer shall not be liable to pay indemnity.
Article 50 For a cargo transportation insurance contract or a voyage insurance contract for a means of transport, once the insurance liability commences, neither of the parties to the contract shall rescind the contract.
Article 51 The insured shall abide by the state provisions on fire protection, safety, productive operation, labor protection, etc. to maintain the safety of the subject matter insured.
The insurer may check the safety status of the subject matter insured according to the contract, and offer written recommendations to the insurance applicant or insured on eliminating unsafe factors or hidden dangers in a timely manner.
Where the insurance applicant or insured fails to perform the duty of maintaining the safety of the subject matter insured as agreed upon, the insurer shall have the right to increase the insurance premium or rescind the contract.
To maintain the safety of the subject matter insured, the insurer may take safety precautions upon consent of the insured.
Article 52 Where the degree of peril of the subject matter insured greatly increases during the term of validity of the contract, the insured shall notify the insurer in a timely manner as agreed upon in the contract, and the insurer may increase the insurance premium or rescind the contract as agreed upon in the contract. If the insurer rescinds the contract, it shall refund the insurance premium to the insurance applicant after deducting the receivable part from the day of commencement of insurance liability to the day of contract rescission as agreed upon in the contract.
Where the insured fails to perform the notification obligation prescribed in the preceding paragraph and an insured incident occurs because the degree of peril of the subject matter insured greatly increases, the insurer shall not be liable to pay indemnity.
Article 53 Under either of the following circumstances, except as otherwise provided for by the contract, the insurer shall reduce the insurance premium, and refund the corresponding amount of insurance premium calculate by day to the insurance applicant:
(1) The relevant condition based on which the insurance premium rate is determined changes, and thus the degree of peril of the subject matter insured evidently decreases.
(2) The insurable value of the subject matter insured evidently decreases.
Article 54 Where the insurance applicant requires rescission of the contract before the insurance liability commences, it shall pay a commission charge to the insurer as agreed upon in the contract, and the insurer shall refund the insurance premium. Where the insurance applicant requires rescission of the contract after the insurance liability commences, the insurer shall refund the insurance premium to the insurance applicant after deducting the receivable part from the day of commencement of insurance liability to the day of contract rescission as agreed upon in the contract.
Article 55 Where the insurance applicant and insurer agree upon the insurable value of the subject matter insured and include it in the contract, when the subject matter insured suffers any loss, the insurable value as agreed upon shall be the standard for calculation of indemnity.
Where the insurance applicant and insurer fail to agree upon the insurable value of the subject matter insured, when the subject matter insured suffers any loss, the actual value of the subject matter insured at the time of occurrence of the insured incident shall be the standard for calculation of indemnity.
The insured amount shall not exceed the insurable value. In the case of excess, the excess shall be invalid, and the insurer shall refund the corresponding amount of insurance premium to the insurance applicant.
If the insured amount is less than the insurable value, except as otherwise provided for by the contract, the insurer shall be liable to pay indemnity according to the proportion between the insured amount and the insurable value.
Article 56 The insurance applicant in overlapping insurance shall notify all insurers of the overlapping insurance.
The total indemnity paid by all insurers in overlapping insurance shall not exceed the insurable value. Each insurer shall be liable to pay indemnity according to the proportion between its insured amount and the total insured amount, except as otherwise provided for by the contract.
The insurance applicant in overlapping insurance may require the insurers to refund pro rata the insurance premium for the excess between the total insured amount and the insurable value.
Overlapping insurance means that an insurance applicant enters into insurance contracts with two or more insurers respectively for the same subject matter insured, the same insurance interest or the same insured incident and the total insured amount exceeds the insurable value.
Article 57 When an insured incident occurs, the insured shall endeavor to take necessary measures to prevent or reduce losses.
The necessary and reasonable expenses paid by the insured for preventing or reducing losses to the subject matter insured after the insured incident occurs shall be at the expense of the insurer. The amount of such expenses shall be calculated separately from the indemnity for losses to the subject matter insured, and shall not exceed the insured amount.
Article 58 Where the subject matter insured suffers a partial loss, the insurance applicant may rescind the contract within 30 days after the insurer pays indemnity; and except as otherwise provided for by the contract, the insurer may also rescind the contract but shall notify the insurance applicant 15 days in advance.
If the contract is rescinded, the insurer shall refund the insurance premium for the part of the subject matter insured which has not suffered any loss to the insurance applicant after deducting the receivable part of the premium from the day of commencement of insurance liability to the day of contract rescission.
Article 59 After an insured incident occurs, if the insurer has paid the full insured amount which equals the insurable value, all rights in the subject matter insured which suffers losses shall be ascribed to the insurer; if the insured amount is less than the insurable value, the insurer shall acquire part of the rights in the subject matter insured which suffers losses according to the proportion between the insured amount and the insurable value.
Article 60 Where an insured incident occurs for any damage caused by a third party to the subject matter insured, the insurer shall, after it pays indemnity to the insured, subrogate the insured's claim for indemnity against the third party within the extent of the indemnity amount.
Where the insured has been indemnified by the third party after the insured incident prescribed in the preceding paragraph occurs, the insurer may, when paying indemnity, deduct the corresponding amount of indemnity which the insured has obtained from the third party.
The insurer's right of subrogation to a claim for indemnity as prescribed in paragraph 1 of this Article shall not prejudice the insured's right to claim indemnity against the third party for the part of loss which the insured has not been indemnified for.
Article 61 Where, after an insured incident occurs and before the insurer pays indemnity, the insured waives the right to claim indemnity against the third party, the insurer shall not be liable to pay indemnity.
Where the insured waives the right to claim indemnity against the third party without the consent of the insurer after the insurer pays indemnity to the insured, the waiver shall be null and void.
Where the insured, intentionally or for gross negligence, causes the insurer to be unable to exercise the right of subrogation to a claim for indemnity, the insurer may deduct or require the insured to refund the corresponding amount of indemnity.
Article 62 The insurer shall not exercise the right of subrogation to a claim for indemnity against a family member or a member of the insured, unless the family member or the member of the insured intentionally causes an insured incident prescribed in paragraph 1 of Article 60 of this Law.
Article 63 When the insurer exercises the right of subrogation to a claim for indemnity against a third party, the insured shall provide the insurer with necessary documents and relevant information known by the insured.
Article 64 The necessary and reasonable expenses paid by the insurer and insured for ascertaining and determining the nature and cause of an insured incident or the degree of losses to the subject matter insured shall be at the expense of the insurer.
Article 65 For the damage caused by the insured in liability insurance to a third party, the insurer may directly pay indemnity to the third party according to the law or the insurance contract.
Where the insured in liability insurance causes any damage to a third party and the insured's liability for indemnity to the third party has been determined, at the request of the insured, the insurer shall directly pay insurance money to the third party. If the insured is slow to make a request, the third party shall have the right to directly request the insurer to pay indemnity for the damage for which the third party shall be indemnified.
Where the insured in liability insurance causes any damage to a third party and the insured has not indemnified the third party for the damage, the insurer shall not pay indemnity to the insured.
Liability insurance means a type of insurance which takes the insured's legal liability for indemnity to a third party as the subject matter insured.
Article 66 Where an arbitration or litigation is instituted against the insured in liability insurance for an insured incident which causes damage to a third party, the arbitration or litigation costs and other necessary and reasonable expenses paid by the insured shall be at the expense of the insurer, except as otherwise provided for by the insurance contract.
Chapter III Insurance Companies
Article 67 The formation of an insurance company shall be subject to the approval of the insurance regulatory body under the State Council.
When examining an application for formation of an insurance company, the insurance regulatory body under the State Council shall consider the needs of the insurance sector for development and fair competition.
Article 68 An insurance company to be formed shall meet the following requirements:
(1) The insurance company's principal shareholder shall have a sustainable capability to make profits, have a good credit standing, have no record of material violation of law or regulation in the last three years and have a net assets value of not less than 200 million yuan.
(2) The insurance company shall have bylaws in compliance with this Law and the Company Law of the People's Republic of China.
(3) The insurance company shall have registered capital in compliance with this Law.
(4) The insurance company shall have directors, supervisors and senior executives who have the expertise and business experience required for their positions.
(5) The insurance company shall have a sound organizational structure and management system.
(6) The insurance company shall have business premises and other facilities related to its operations in compliance with the relevant requirements.
(7) Other requirements as set out by laws, administrative regulations and the insurance regulatory body under the State Council.
Article 69 The minimum amount of registered capital of an insurance company to be formed shall be 200 million yuan.
The insurance regulatory body under the State Council may adjust the minimum amount of registered capital of an insurance company according to the business scope or scale of the insurance company, but the amount shall not be less than the amount as set out in paragraph 1 of this Article.
The registered capital of an insurance company must be paid-in monetary capital.
Article 70 To apply for forming an insurance company, the applicant shall apply in writing to the insurance regulatory body under the State Council, and submit the following materials:
(1) A written application for formation, which shall specify the name, registered capital, business scope, etc. of the insurance company to be formed.
(2) A feasibility study report.
(3) A formation preparation plan.
(4) Each investor's business license or other background data and accounting report of the prior year as audited by an accounting firm.
(5) A list of the person in charge of the formation preparation group and the proposed chairman of the board of directors and managers who are acknowledged by all the investors and the acknowledgement certificates of such persons.
(6) Other materials as specified by the insurance regulatory body under the State Council.
Article 71 The insurance regulatory body under the State Council shall examine an application for forming an insurance company, make a decision to approve or disapprove the formation preparation within six months after accepting the application and notify the applicant in writing. If disapproving the application, it shall provide reasons in writing.
Article 72 An applicant shall complete the formation preparation within one year after receiving the notice of approval of formation preparation, and shall not carry out any insurance operation during the formation preparation period.
Article 73 An applicant may apply to the insurance regulatory body under the State Council for commencement of business if it satisfies the formation conditions as prescribed in Article 68 of this Law after completing the formation preparation.
The insurance regulatory body under the State Council shall, within 60 days after accepting the application for commencement of business, make a decision to approve or disapprove commencement of business. If approving the application, it shall issue an insurance operation permit; or if disapproving the application, it shall notify the applicant in writing with reasons.
Article 74 The formation of branch offices of insurance companies within the territory of the People's Republic of China shall be subject to the approval of the insurance regulatory bodies.
The branch offices of insurance companies shall have no corporate status, and their civil liabilities shall be assumed by insurance companies.
Article 75 To form a branch office, an insurance company shall apply in writing to the insurance regulatory body, and submit the following materials:
(1) A written application.
(2) A three-year business development plan and market analysis materials of the branch office to be formed.
(3) The resumes and relevant certificates of the proposed senior executives of the branch office.
(4) Other materials as specified by the insurance regulatory body under the State Council.
Article 76 The insurance regulatory body shall examine an insurance company's application for forming a branch office, and within 60 days after accepting the application, make a decision to approve or disapprove the application. If approving the application, it shall issue an insurance operation permit for a branch office; or if disapproving the application, it shall notify the applicant in writing with reasons.
Article 77 The insurance company or a branch office thereof whose formation is approved shall undergo registration formalities at the administrative authority for industry and commerce on the basis of the insurance operation permit, and obtain a business license.
Article 78 Where an insurance company or a branch office thereof, without any good reasons, fails to undergo registration formalities at the administrative authority for industry and commerce within six months after obtaining an insurance operation permit, its insurance operation permit shall become invalid.
Article 79 The formation of subsidiary companies and branch offices outside the territory of the People's Republic of China by insurance companies shall be subject to the approval of the insurance regulatory body under the State Council.
Article 80 The formation of representative offices within the territory of the People's Republic of China by foreign insurance companies shall be subject to the approval of the insurance regulatory body under the State Council. Representative offices shall not carry out any insurance operation.
Article 81 The directors, supervisors and senior executives of insurance companies shall have good conduct, be familiar with laws and administrative regulations on insurance, have the management capability required for performing their duties and have obtained the corresponding office qualifications granted by the insurance regulatory body before taking offices.
The scope of senior executives of insurance companies shall be prescribed by the insurance regulatory body under the State Council.
Article 82 A person under any of the circumstances prescribed in Article 146 of the Company Law of the People's Republic of China or either of the following circumstances shall not serve as a director, supervisor or senior executive in an insurance company:
(1) The person is a former director, supervisor or senior executive of a financial institution whose office qualification has been cancelled by the financial regulatory body for any violation of law or discipline, and it has not been five years since the cancellation.
(2) The person is a former lawyer, certified public accountant or professional of an institution such as asset assessment institution or verification institution whose practicing qualification has been revoked for any violation of law or discipline, and it has not been five years since the revocation.
Article 83 A director, supervisor or senior executive of an insurance company who violates a law or administrative regulation or the bylaws of the company in the process of performing his or her duties for the company, causing any loss to the company, shall assume compensatory liability.
Article 84 An insurance company shall obtain the approval of the insurance regulatory body under any of the following circumstances:
(1) Change of its name.
(2) Change of registered capital.
(3) Change of business premises of the company or a branch office thereof.
(4) Cancellation of a branch office.
(5) Division or combination of the company.
(6) Amendment of the bylaws of the company.
(7) Change of any shareholder whose amount of capital contribution accounts for 5% or more of the total capital of the company which is a limited liability company, or change of any shareholder who holds 5% or more of the shares of the company which is a joint-stock limited company.
(8) Any other circumstance as specified by the insurance regulatory body under the State Council.
Article 85 Insurance companies shall employ professionals to establish an actuarial reporting system and a compliance reporting system.
Article 86 Insurance companies shall file the relevant reports, statements, documents and materials according to the requirements of the insurance regulatory body.
The solvency reports, financial and accounting reports, actuarial statements, regulatory compliance reports and other relevant reports, statements, documents and materials of insurance companies must truthfully record the insurance business matters, and contain no false record, misleading statement or material omission.
Article 87 Insurance companies shall properly maintain complete account books, original documents and relevant materials on their insurance operations as required by the insurance regulatory body under the State Council. ‘
The aforesaid account books, original documents and relevant materials shall be maintained for at least five years if the duration of insurance is less than one year or for at least ten years if the duration of insurance is more than one year from the day when an insurance contract is terminated.
Article 88 To employ or dismiss an accounting firm, an asset assessment institution, a credit rating agency or any other intermediary service provider, an insurance company shall report to the insurance regulatory body, and in the case of dismissal, provide reasons.
Article 89 Where an insurance company needs to be dissolved as a result of any division or combination of it, a resolution of the shareholders' meeting or the occurrence of a cause of dissolution prescribed in the bylaws of the company, it shall be dissolved upon approval of the insurance regulatory organ under the State Council.
An insurance company which operates life insurance business shall not be dissolved except for any division or combination of it or abolition according to the law.
A liquidation group shall be set up to perform liquidation of an insurance company to be dissolved.
Article 90 Where an insurance company falls under any of the circumstances prescribed in Article 2 of the Enterprise Bankruptcy Law of the People's Republic of China, upon approval of the insurance regulatory body under the State Council, the insurance company or any creditor thereof may apply to the people's court for reorganization, reconciliation or bankruptcy liquidation of the company; the insurance regulatory body under the State Council may also apply to the people's court for reorganization or bankruptcy liquidation of the company.
Article 91 The bankruptcy property shall be used for repayment in the following order after first repayment of bankruptcy costs and debts incurred for the common benefit of creditors:
(1) The wages and salaries, medical fees, disability subsidies and pensions owed to employees, the basic old-age insurance premiums and basic medical insurance premiums which shall be transferred into the personal accounts of employees, and the compensations which shall be made to employees as required by laws and administrative regulations.
(2) Insurance indemnities or insurance benefits.
(3) The social insurance fees other than those prescribed in subparagraph 1 and taxes owed by the company.
(4) The general bankruptcy claims.
If the bankruptcy property is not enough for repayment of debts at the same level, it shall be distributed pro rata.
The salaries of the directors, supervisors and senior executives of a bankrupt insurance company shall be calculated as per the average wage of the employees of the company.
Article 92 Where an insurance company which operates life insurance business is abolished according to the law or is declared bankrupt according to the law, it must assign its life insurance contracts and liability reserve funds to another insurance company which operates life insurance business; where it cannot reach an assignment agreement with another insurance company, the insurance regulatory body under the State Council shall designate an insurance company which operates life insurance business to accept the assignment.
In the assignment of the life insurance contracts and liability reserve funds prescribed in the preceding paragraph or the acceptance of assignment of the same as designated by the insurance regulatory body under the State Council, the legitimate rights and interests of the insureds and beneficiaries shall be protected.
Article 93 Where an insurance company terminates its operations according to the law, its insurance operation permit shall be revoked.
Article 94 Insurance companies shall be governed by the Company Law of the People's Republic of China, except as otherwise provided for by this Law.
Chapter IV Rules of Insurance Operations
Article 95 The scope of business of insurance companies shall be as follows:
(1) Personal insurance, including but not limited to life insurance, health insurance, and accidental injury insurance.
(2) Property insurance, including but not limited to property loss insurance, liability insurance, credit insurance, and guarantee insurance.
(3) Other insurance-related business as approved by the insurance regulatory body under the State Council.
No insurer shall concurrently operate the personal insurance business and the property insurance business. However, upon approval of the insurance regulatory body under the State Council, an insurance company which operates property insurance business may operate short-term health insurance business and accidental injury insurance business.
Insurance companies shall operate insurance business within the scope of business approved by the insurance regulatory body under the State Council.
Article 96 Upon approval of the insurance regulatory body under the State Council, an insurance company may operate the following reinsurance for insurance business prescribed in Article 95 of this Law:
(1) Outward reinsurance.
(2) Inward reinsurance.
Article 97 An insurance company shall set aside a guarantee fund at the rate of 20% of its total registered capital, deposit it with a bank designated by the insurance regulatory body under the State Council, and use it for no purpose other than repayment of debts at the time of liquidation of the company.
Article 98 Insurance companies shall set aside various liability reserve funds according to the principle of protecting the interests of insureds and guaranteeing solvency.
The specific measures for insurance companies to set aside and carry over liability reserve funds shall be developed by the insurance regulatory body under the State Council.
Article 99 Insurance companies shall set aside provident funds according to the law.
Article 100 Insurance companies shall pay contributions to the insurance security fund.
Contributions to the insurance security fund shall be managed in a centralized manner and used by overall planning under the following circumstances:
(1) Providing remedies to insurance applicants, insureds or beneficiaries, where an insurance company is abolished or declared bankrupt.
(2) Providing remedies to the insurance company which accepts the life insurance contracts of an insurance company which is abolished or declared bankrupt.
(3) Any other circumstance as specified by the State Council.
The specific measures for raising, managing and using the insurance security fund shall be developed by the State Council.
Article 101 An insurance company shall have the minimum solvency appropriate for its scale of business and degree of risk. The difference between the admissible assets and the admissible liabilities of an insurance company shall not be less than the amount prescribed by the insurance regulatory body under the State Council; otherwise, the insurance company shall take corresponding measures to reach the prescribed amount according to the requirements of the insurance regulatory body under the State Council.
Article 102 The self-retained insurance premium in the current year of an insurance company which operates property insurance business shall not exceed four times the sum of its actual capital and provident funds.
Article 103 The liability assumed by an insurance company for each risk unit, namely, the maximum loss caused by a single insured incident, shall not exceed 10 percent of the sum of its actual capital and provident funds. The excess shall be reinsured.
Insurance companies shall classify risk units according to the provisions issued by the insurance regulatory body under the State Council.
Article 104 Insurance companies shall submit their methods for classifying risk units and catastrophe risk arrangement plans to the insurance regulatory body under the State Council for recordation.
Article 105 Insurance companies shall conduct reinsurance according to the provisions issued by the insurance regulatory body under the State Council, and select their reinsurers in a prudent manner.
Article 106 Insurance companies must use funds according to the principles of solidity and safety.
Insurance companies may only use their funds in the following forms:
(1) Bank deposits.
(2) Trading in bonds, stocks, shares of securities investment funds, and other negotiable securities.
(3) Investment in real estate.
(4) Other forms of fund use as prescribed by the State Council.
The specific measures for the administration of the use of funds by insurance companies shall be developed by the insurance regulatory body under the State Council according to the preceding two paragraphs.
Article 107 Upon approval of the insurance regulatory body under the State Council in conjunction with the securities regulatory body under the State Council, insurance companies may form insurance asset management companies.
Insurance asset management companies shall conduct securities investment activities according to the Securities Law of the People's Republic of China and other relevant laws and administrative regulations.
The measures for the administration of insurance asset management companies shall be developed by the insurance regulatory body under the State Council in conjunction with other relevant departments under the State Council.
Article 108 Insurance companies shall establish rules for the management and information disclosure of affiliated transactions according to the provisions issued by the insurance regulatory body under the State Council.
Article 109 None of the controlling shareholders, actual controllers, directors, supervisors and senior executives of insurance companies shall damage the interests of the companies through affiliated transactions.
Article 110 Insurance companies shall truthfully, accurately and completely disclose their financial and accounting reports, risk management status, insurance product marketing information and other major matters according to the provisions issued by the insurance regulatory body under the State Council.
Article 111 The insurance salespersons of insurance companies shall have good conduct and professional capacity required for insurance sales. The code of conduct and the measures for the administration of insurance salespersons shall be developed by the insurance regulatory body under the State Council.
Article 112 Insurance companies shall establish an insurance agent registration system and strengthen the training and management of insurance agents, and shall not incite or induce insurance agents to act in bad faith.
Article 113 Insurance companies and their branch offices shall use the insurance operation permit according to the law, and shall not transfer, lease or lend the insurance operation permit.
Article 114 Insurance companies shall, according to the provisions issued by the insurance regulatory body under the State Council, fairly and reasonably determine the insurance clauses and premium rates, without prejudice to the legitimate rights and interests of insurance applicants, insureds and beneficiaries.
Insurance companies shall perform the obligation of paying indemnity or insurance benefits in a timely manner according to insurance contracts and this Law.
Article 115 Insurance companies shall operate business according to the principle of fair competition, and shall not commit unfair competition.
Article 116 In their insurance operations, insurance companies and their staff shall be prohibited from:
(1) deceiving an insurance applicant, insured or beneficiary;
(2) hiding any important information on the insurance contract from an insurance applicant;
(3) obstructing any insurance applicant from performing, or inducing any insurance applicant not to perform, the obligation of telling the truth as prescribed in this Law;
(4) giving or promising to give any insurance premium kickback or benefit other than those agreed upon in the insurance contract to an insurance applicant, insured or beneficiary;
(5) refusing to legally perform the obligation of paying indemnity or insurance benefits under the insurance contract;
(6) intentionally fabricating an insured incident which has never occurred or an insurance contract or intentionally exaggerating the degree of damage caused by an insured incident which has actually occurred for the purpose of making a false claim, swindling insurance money or seeking other illicit interests;
(7) embezzling, withholding or encroaching on insurance premiums;
(8) authorizing any institution which is not legally qualified to carry out insurance sales activities;
(9) seeking any illicit benefit for any other institution or individual in the process of insurance operations;
(10) conducting any illegal activity such as swindling money in the form of fabricating insurance intermediary business or cancellation of insurance through insurance agents, insurance brokers or insurance assessment agencies;
(11) damaging the goodwill of competitors by fabrication or spreading false facts, or disturbing the order of the insurance market by any other act of unfair competition;
(12) divulging any trade secret of an insurance applicant or insured known in the process of business activity; or
(13) conducting any other violation of a law or administrative regulation or the provisions issued by the insurance regulatory body under the State Council.
Chapter V Insurance Agents and Insurance Brokers
Article 117 Insurance agents shall be institutions or individuals which charge commissions to insurers and operate insurance business on behalf of insurers to the extent as authorized by insurers.
Insurance agencies shall include full-time insurance agencies which only operate the insurance agency business and part-time insurance agencies which concurrently operate the insurance agency business.
Article 118 Insurance brokers shall be institutions which, based on the interests of insurance applicants, provide intermediary services for insurance applicants and insurers to enter into insurance contracts, and charge commissions according to the law.
Article 119 Insurance agencies and insurance brokers shall satisfy the requirements prescribed by the insurance regulatory body under the State Council, and have obtained the insurance agency business permit or brokerage business permit issued by the insurance regulatory bodies.
Article 120 For a full-time insurance agency or an insurance broker to be formed as a company, its minimum amount of registered capital shall be governed by the Company Law of the People's Republic of China.
The insurance regulatory body under the State Council may adjust the minimum amount of registered capital of a full-time insurance agency or an insurance broker according to its business scope or scale, but the amount shall not be less than the amount as set out in the Company Law of the People's Republic of China.
The registered capital or capital contribution of a full-time insurance agency or an insurance broker must be paid-in monetary capital.
Article 121 The senior executives of a full-time insurance agency or an insurance broker shall have good conduct, be familiar with insurance laws and administrative regulations, have the management capability required for performing their duties and have obtained the corresponding office qualifications granted by the insurance regulatory bodies before taking offices.
Article 122 Individual insurance agents, practitioners in insurance agencies, and practitioners in insurance brokers shall have good conduct and professional capacity required for practicing insurance agency or insurance brokerage.
Article 123 Insurance agencies and insurance brokers shall have their own business premises and maintain special account books to record the revenues and expenditures of the insurance agency or brokerage business.
Article 124 Insurance agencies and insurance brokers shall deposit guarantee funds or take out professional liability insurance according to the provisions issued by the insurance regulatory body under the State Council.
Article 125 No individual insurance agent may concurrently represent two or more insurers when operating life insurance business on behalf of an insurer.
Article 126 An insurer which authorizes an insurance agent to represent it in insurance operations shall enter into an agency agreement with the insurance agent to agree upon their rights and obligations according to the law.
Article 127 An insurer shall be responsible for its insurance agent's insurance operations to the extent of its authorization.
Where an insurance agent enters into an insurance contract in the name of an insurer without authorization, beyond authorization or after the termination of authorization and the insurance applicant has reasons to believe that the insurance agent has the authorization, the act of agency shall be valid. The insurer may hold such an agent liable for exceeding authorization according to the law.
Article 128 An insurance broker which, for its fault, causes any loss to an insurance applicant or insured shall assume compensatory liability.
Article 129 The parties to insurance activities may authorize insurance adjustment institutions or other legally established independent assessment institutions or persons with relevant expertise to conduct assessment and identification for the insured incidents.
Institutions and persons authorized to conduct assessment and identification for the insured incidents shall conduct assessment and identification in a legal, independent, objective and fair manner, free from intervention by any other entity or individual.
An institution or person as mentioned in the preceding paragraph which causes any loss to an insurer or insured intentionally or negligently shall assume compensatory liability.
Article 130 Insurance commissions may only be paid to insurance agents and insurance brokers, and shall not be paid to anyone else.
Article 131 In their insurance operations, insurance agents, insurance brokers, and their practitioners shall be prohibited from:
(1) deceiving an insurer, insurance applicant, insured or beneficiary;
(2) hiding any important information on an insurance contract from the insurance applicant;
(3) obstructing any insurance applicant from performing, or inducing any insurance applicant not to perform, the obligation of telling the truth as prescribed in this Law;
(4) giving or promising to give any benefit other than those agreed upon in the insurance contract to an insurance applicant, insured or beneficiary;
(5) forcing or inducing any insurance applicant to enter into or restricting an insurance applicant in entering into an insurance contract by using any administrative power, position or professional advantage or by any other illicit means;
(6) forging or illegally modifying any insurance contract, or providing any false evidential materials for a party to an insurance contract;
(7) embezzling, withholding or encroaching on insurance premiums or insurance money;
(8) seeking any illicit benefit for any other institution or individual by using business advantages;
(9) colluding with any insurance applicant, insured or beneficiary to swindle insurance money; or
(10) divulging any trade secret of an insurer, insurance applicant or insured known in the process of business activity.
Article 132 The provisions of paragraph 1 of Article 86 and Article 113 of this Law shall apply to insurance agencies and insurance brokers.
Chapter VI Supervision and Administration of the Insurance Sector
Article 133 An insurance regulatory body shall, under the principle of legality, openness and fairness, supervise and administer the insurance sector according to this Law and its duties prescribed by the State Council so as to maintain the order of the insurance market and protect the legitimate rights and interests of insurance applicants, insureds and beneficiaries.
Article 134 The insurance regulatory body under the State Council shall develop and issue departmental rules on the supervision and administration of the insurance sector according to the laws and administrative regulations.
Article 135 The insurance clauses and premium rates for insurance products which concern the public interest, compulsory insurance products and newly developed life insurance products shall be subject to the approval of the insurance regulatory body under the State Council, which shall follow the principle of protecting the public interest and preventing unfair competition in the process of approval. The insurance clauses and premium rates for other insurance products shall be subject to recordation with the insurance regulatory bodies.
The specific measures for the approval and recordation of insurance clauses and premium rates shall be developed by the insurance regulatory body under the State Council according to the preceding paragraph.
Article 136 Where any insurance clause or premium rate used by an insurance company violates a law or administrative regulation or the provisions issued by the insurance regulatory body under the State Council, the insurance regulatory body shall order the insurance company to stop using it and make correction within a prescribed time limit; and if the circumstances are serious, may prohibit the insurance company from applying for new insurance clauses or insurance premium rates within a prescribed time limit.
Article 137 The insurance regulatory body under the State Council shall establish and improve a solvency regulatory system of insurance companies to monitor the solvency of insurance companies.
Article 138 The insurance regulatory body under the State Council shall place insurance companies failing to meet the solvency requirements under priority supervision, and may take the following measures according to the actual circumstances:
(1) Ordering an increase of capital or reinsurance.
(2) Limiting the scope of business.
(3) Restricting the payment of dividends to shareholders.
(4) Restricting the purchase of fixed assets or the scale of operation costs.
(5) Restricting the forms and proportion of use of funds.
(6) Restricting the formation of additional branch offices.
(7) Ordering an auction of non-performing assets or transfer of certain insurance business.
(8) Restricting the level of remuneration of directors, supervisors and senior executives;
(9) Restricting commercial advertisements.
(10) Ordering stop of accepting new business.
Article 139 Where an insurance company fails to set aside or carry over any liability reserve funds or conduct reinsurance as required by this Law, or seriously violates the provisions of this Law on the use of funds, the insurance regulatory body shall order it to make correction within a prescribed time limit, and may order it to replace the person in charge and the relevant managers.
Article 140 Where an insurance company fails to make correction within a prescribed time limit after the insurance regulatory body makes a decision on the correction according to Article 139 of this Law, the insurance regulatory body under the State Council may decide to send insurance professionals and designate the relevant persons of the insurance company to form an overhaul group to overhaul the company.
An overhaul decision shall state the name of the company overhauled, the reasons for overhaul, the members of the overhaul group and the period of overhaul, and be made public.
Article 141 The overhaul group shall have the right to supervise the day-to-day business of the overhauled insurance company. The person in charge and the relevant managers of the overhauled insurance company shall perform their functions under the supervision of the overhaul group.
Article 142 In the process of overhaul, the original business of the overhauled insurance company shall continue. However, the insurance regulatory body under the State Council may order the company to stop certain original business or stop accepting new business and adjust its use of funds.
Article 143 Where an overhauled insurance company has rectified its violations of this Law through the overhaul and resumed the normal operation, the overhaul group shall submit a report, the overhaul shall be terminated upon approval of the insurance regulatory body under the State Council, and the insurance regulatory body under the State Council shall make an announcement.
Article 144 Where an insurance company falls under either of the following circumstances, the insurance regulatory body under the State Council may receive it:
(1) The company seriously fails to meet the solvency requirements.
(2) The company damages the public interest by violating this Law, which may seriously endanger or has seriously endangered the solvency of the company.
The debtor-creditor relationships of the insurance company shall remain unchanged after it is received.
Article 145 The measures for the formation of a receivership group and the implementation of receivership shall be determined and announced by the insurance regulatory body under the State Council.
Article 146 Upon expiration of the receivership period, the insurance regulatory body under the State Council may decide to extend the receivership period, but the receivership period shall not exceed two years at most.
Article 147 Where an insurance company in receivership resumes its normal operation capacity upon expiration of the receivership period, the insurance regulatory body under the State Council shall decide to terminate the receivership and make an announcement.
Article 148 Where an insurance company overhauled or in receivership falls under the circumstances as prescribed in Article 2 of the Enterprise Bankruptcy Law of the People's Republic of China, the insurance regulatory body under the State Council may apply to the people's court for reorganization or bankruptcy liquidation of the company.
Article 149 Where the insurance operation permit of an insurance company is revoked for the illegal operations, or the solvency of an insurance company is lower than the standard prescribed by the insurance regulatory body under the State Council, and the order of the insurance market will be seriously endangered or the public interest will be seriously damaged if the company is not abolished, the insurance regulatory body under the State Council shall abolished it, make an announcement, and legally form a liquidation group to conduct liquidation in a timely manner.
Article 150 The insurance regulatory body under the State Council shall have the right to require the shareholders and actual controller of an insurance company to provide relevant information and materials within a prescribed time limit.
Article 151 Where an shareholder of an insurance company seriously damages the interests of the company through affiliated transactions, which endangers the company's solvency, the insurance regulatory body under the State Council shall order the shareholder to make correction. Before the shareholder makes correction as required, the insurance regulatory body under the State Council may restrict the shareholder's rights of such a shareholder, and if the shareholder refuses to make correction, order the assignment of the shareholder's shares in the insurance company.
Article 152 An insurance regulatory body may, as required for performing its functions of supervision and administration, hold regulatory talks with the directors, supervisors and senior executives of an insurance company and require them to provide explanations on major matters concerning the operations and risk management of the company.
Article 153 During the period of overhaul, receivership, or abolition liquidation of an insurance company or upon occurrence of any major risk to an insurance company, the insurance regulatory body under the State Council may take the following measures against the directly liable directors, supervisors, senior executives and other directly liable persons of the company:
(1) Notifying the emigration administrative authority to prevent them from leaving this country.
(2) Requesting the judicial authority to prohibit them from disposing of their property by displacement, assignment or any other means or from setting any other right in their property.
Article 154 For the purpose of performing its functions according to the law, an insurance regulatory body may take the following measures:
(1) Conducting on-site inspections of insurance companies, insurance agents, insurance brokers, insurance asset management companies, and representative offices of foreign insurance institutions.
(2) Entering a place where the occurrence of an illegal act is suspected to conduct investigation and take evidence.
(3) Inquiring the parties and other entities and individuals related to the investigated event and requiring them to provide explanations on the relevant matters.
(4) Consulting and copying materials related to the investigated event, such as materials on the registration of property rights.
(5) Consulting and copying the financial and accounting materials and other relevant documents and materials of insurance companies, insurance agents, insurance brokers, insurance asset management companies, representative offices of foreign insurance institutions and other entities and individuals related to the investigated event; and seizing the documents and materials which may be displaced, concealed or destroyed.
(6) Inquiring about the bank accounts of insurance companies, insurance agents, insurance brokers, insurance asset management companies, and representative offices of foreign insurance institutions which are suspected of engaging in illegal operations and the bank accounts of the entities and individuals related to the suspected illegal matter.
(7) Upon approval of the primary person in charge of the insurance regulatory body, applying to the people's court for freezing or seizing any illegal funds and other involved assets which, as proved, have been or may be displaced or concealed or any important evidence which, as proved, has been or may be concealed, forged or destroyed.
To take the measure prescribed in subparagraph (1), (2) or (5) of the preceding paragraph, an insurance regulatory body shall obtain the approval of the person in charge of the insurance regulatory body. To take the measure prescribed in subparagraph (6), an insurance regulatory body shall obtain the approval of the person in charge of the insurance regulatory body under the State Council.
Where an insurance regulatory body conducts a supervisory inspection or investigation according to the law, there shall be at least two inspectors or investigators who shall present their lawful credentials and a notice of supervisory inspection or investigation; if there are less than two inspectors or investigators or they fail to present their lawful credentials or a notice of supervisory inspection or investigation, the entity or individual under inspection or investigation shall have the right to refuse the inspection or investigation.
Article 155 When an insurance regulatory body performs its functions according to the law, the entities and individuals under inspection or investigation shall provide cooperation.
Article 156 The staff of an insurance regulatory body shall be duteous, impartial and honest and handle affairs according to the law, and shall not seek illicit benefits by taking advantage of their positions or disclose the relevant entity or individual's trade secrets to which they have access.
Article 157 The insurance regulatory body under the State Council shall establish a supervision and administration information sharing mechanism with the People's Bank of China and other financial regulatory bodies under the State Council.
When an insurance regulatory body performs its functions according to the law by conducting supervisory inspection or investigation, the relevant departments shall provide cooperation.
Chapter VII Legal Liability
Article 158 Where anyone, in violation of this Law, forms an insurance company or insurance asset management company without approval or illegally operates the commercial insurance business, the insurance regulatory body shall ban it, confiscate the illegal income, and impose a fine of not less than the amount of but not more than five times the illegal income on it or if there is no illegal income or the amount of illegal income is less than 200,000 yuan, a fine of 200,000 yuan up to 1 million yuan on it.
Article 159 Where anyone, in violation of this Law, forms a full-time insurance agency or an insurance broker without approval or carries out the insurance agency or brokerage business without an insurance agency or brokerage business permit, the insurance regulatory body shall ban it, confiscate the illegal income, and impose a fine of not less than the amount of but not more than five times the illegal income upon it or if there is no illegal income or the amount of illegal income is less than 50,000 yuan, a fine of 50,000 yuan up to 300,000 yuan on it.
Article 160 Where an insurance company, in violation of this Law, operates beyond the approved scope of business, the insurance regulatory body shall order it to make correction within a prescribed time limit, confiscate the illegal income, and impose a fine of not less than the amount of but not more than five times the illegal income on it or if there is no illegal income or the amount of illegal income is less than 100,000 yuan, a fine of 100,000 yuan up to 500,000 yuan on it. If the insurance company fails to make correction within the prescribed time limit or there are serious consequences, the insurance regulatory body shall order it to suspend business for overhaul or revoke its business permit.
Article 161 Where an insurance company commits any of the conduct prescribed in Article 116 of this Law, the insurance regulatory body shall order it to make correction and impose a fine of 50,000 yuan up to 300,000 yuan on it; and if the circumstances are serious, restrict its scope of business, order it to stop accepting new business or revoke its business permit.
Article 162 Where an insurance company violates Article 84 of this Law, the insurance regulatory body shall order it to make correction and impose a fine of 10,000 yuan up to 100,000 yuan on it.
Article 163 Where an insurance company, in violation of this Law, commits either of the following conduct, the insurance regulatory body shall order it to make correction and impose a fine of 50,000 yuan up to 300,000 yuan on it:
(1) Providing excess insurance with serious circumstances.
(2) Providing insurance which takes death as the condition for paying insurance money for a person without civil conduct capacity.
Article 164 Where anyone, in violation of this Law, commits any of the following conduct, the insurance regulatory body shall order it to make correction and impose a fine of 50,000 yuan up to 300,000 yuan on it; and if the circumstances are serious, restrict its scope of business, order it to stop accepting new business or revoke its business permit:
(1) Failing to set aside the guarantee fund as required or illegally using the guarantee fund.
(2) Failing to set aside or carry over any liability reserve fund as required.
(3) Failing to pay contributions to the insurance security fund or set aside provident funds as required.
(4) Failing to conduct reinsurance as required.
(5) Failing to use the funds of the insurance company as required.
(6) Forming a branch office without approval.
(7) Failing to apply for approval of insurance clauses or premium rates as required.
Article 165 Where an insurance agency or insurance broker commits any of the conduct prescribed in Article 121 of this Law, the insurance regulatory body shall order it to make correction and impose a fine of 50,000 yuan up to 300,000 yuan on it; and if the circumstances are serious, shall revoke its business permit.
Article 166 Where an insurance agency or insurance broker, in violation of this Law, commits either of the following conduct, the insurance regulatory body shall order it to make correction and impose a fine of 20,000 yuan up to 100,000 yuan on it; and if the circumstances are serious, shall order it to suspend business for overhaul or revoke its business permit:
(1) Failing to deposit the guarantee fund or take out the professional liability insurance as required.
(2) Failing to maintain special account books to record its revenues and expenditures as required.
Article 167 Where anyone, in violation of this Law, retains any person without the office qualification, the insurance regulatory body shall order it to make correction and impose a fine of 20,000 yuan up to 100,000 yuan on it.
Article 168 Where anyone, in violation of this Law, transfers, leases or lends its business permit, the insurance regulatory body shall impose a fine of 10,000 yuan up to 100,000 yuan on it; and if the circumstances are serious, shall order it to suspend business for overhaul or revoke its business permit.
Article 169 Where anyone, in violation of this Law, commits any of the following conduct, the insurance regulatory body shall order it to make correction within a prescribed time limit; and if it fails to make correction within the prescribed time limit, shall impose a fine of 10,000 yuan up to 100,000 yuan on it:
(1) Failing to submit or maintain reports, statements, documents and materials as required or failing to provide relevant information or materials as required.
(2) Failing to submit insurance clauses or premium rates for recordation as required.
(3) Failing to disclose information as required.
Article 170 Where anyone, in violation of this Law, commits any of the following conduct, the insurance regulatory body shall order it to make correction and impose a fine of 100,000 yuan up to 500,000 yuan on it; and if the circumstances are serious, may restrict its scope of business, order it to stop accepting new business or revoke its business permit:
(1) Preparing or providing any false report, statement, document or material.
(2) Refusing or obstructing any supervisory inspection conducted according to the law.
(3) Failing to use the approved or recorded insurance clauses or premium rates as required.
Article 171 Where an insurance company, insurance asset management company, full-time insurance agency, or insurance broker violates this Law, the insurance regulatory body shall, in addition to punish it according to the provisions of Article 160 to Article 170 respectively, admonish and impose a fine of 10,000 yuan up to 100,000 yuan on its directly liable executive in charge or any other directly liable person; and if the circumstances are serious, cancel his or her office qualification.
Article 172 Where an individual insurance agent violates this Law, the insurance regulatory body shall admonish him or her and may impose a fine of not more than 20,000 yuan on him or her; or if the circumstances are serious, impose a fine of 20,000 yuan up to 100,000 yuan on him or her.
Article 173 Where a foreign insurance institution forms a representative office within the territory of the People's Republic of China without the approval of the insurance regulatory body under the State Council, the insurance regulatory body under the State Council shall ban the representative office and impose a fine of 50,000 yuan up to 300,000 yuan on the foreign insurance institution.
Where a representative office formed by a foreign insurance institution within the territory of the people's republic of China carries out any insurance operation, the insurance regulatory body shall order it to make correction, confiscate the illegal income, and impose a fine of not less than the amount of but not more than five times the illegal income on it or if there is no illegal income or the amount of illegal income is less than 200,000 yuan, a fine of 200,000 yuan up to 1 million yuan on it; may order it to replace its chief representative; and if the circumstances are serious, shall abolish the representative office.
Article 174 An insurance applicant, insured or beneficiary who commits any of the following conduct for the purpose of insurance fraud shall be subjected to administrative punishment if not criminally punishable:
(1) An insurance applicant intentionally fabricates a subject matter insured to swindle insurance money.
(2) An insured incident which has never occurred is fabricated, the cause of an insured incident is fabricated, or the degree of damage is exaggerated to swindle insurance money.
(3) An insured incident is intentionally caused to swindle insurance money.
An identification expert, assessor, or certifier of an insured incident who intentionally provides any false certificate for an insurance applicant, insured or beneficiary to commit an insurance fraud shall be punished according to the preceding paragraph.
Article 175 Whoever causes damage to others by violating this Law shall be held civilly liable according to the law.
Article 176 Whoever refuses or obstructs the supervisory inspection or investigation performed by an insurance regulatory body or its staff according to the law shall be subjected to punishment in public security administration if no violence or threat is used.
Article 177 Where a law or administrative regulation is violated and the circumstances are serious, the insurance regulatory body under the State Council may forbid the relevant liable persons from practicing in the insurance sector within a prescribed time limit or even for a lifetime.
Article 178 Where any staff member of an insurance regulatory body who engages in the supervision and administration work commits any of the following conduct, disciplinary action shall be taken again the staff member according to the law:
(1) Approving the formation of an institution in violation of the relevant provisions.
(2) Approving insurance clauses or premium rates in violation of the relevant provisions.
(3) Conducting on-site inspection in violation of the relevant provisions.
(4) Inquiring about accounts or freezing funds in violation of the relevant provisions.
(5) Divulging any trade secret of a relevant entity or individual to which he or she has access.
(6) Enforcing any administrative punishment in violation of the relevant provisions.
(7) Any other conduct of abusing power or neglecting duties.
Article 179 Whoever is suspected of a crime by violating this Law shall be held criminally liable according to the law.
Chapter VIII Supplemental Provisions
Article 180 Insurance companies shall join in the Insurance Association of China. Insurance agents, insurance brokers and insurance adjustment institutions may join in the Insurance Association of China.
The Insurance Association of China shall be a self-regulatory organization for the insurance sector and a social group legal person.
Article 181 The commercial insurance business operated by legally established insurance organizations other than insurance companies shall be governed by this Law.
Article 182 Marine insurance shall be governed by the relevant provisions of the Maritime Law of the People's Republic of China; where the Maritime Law of the People's Republic of China is silent, the relevant provisions of this Law shall apply.
Article 183 Chinese-foreign equity joint venture insurance companies, wholly foreign-owned insurance companies and subsidiary companies of foreign insurance companies shall be governed by this Law; except as otherwise provided for by laws and administrative regulations.
Article 184 The state supports the development of insurance business which serves agricultural production. Agricultural insurance shall be provided for separately by laws and administrative regulations.
Where laws and administrative regulations provide otherwise for any compulsory insurance, such provisions shall apply.
Article 185 This Law shall come into force on October 1, 2009.