Insurance Law of the People's Republic of China (Revised in 2015) 

Order of the President of the People's Republic of China No. 26

April 24, 2015

(Adopted at the 14th meeting of the Standing Committee of the Eighth National People's Congress on June 30, 1995; amended at the 30th meeting of the Standing Committee of the Ninth National People's Congress on October 28, 2002 in accordance with the Decision on Amending the Insurance Law of the People's Republic of China; revised at the 7th meeting of the Standing Committee of the 11th National People's Congress on February 28, 2009; revised according to the Decisions of the Standing Committee of the National People's Congress on Revising the Insurance Law of the People's Republic of China and Four Other Laws on August 31, 2014; and revised according to the Decision of the Standing Committee of the National People's Congress on Revising Five Laws Including the Metrology Law of the People's Republic of China on April 24, 2015)

Contents
Chapter I General Provisions
Chapter II Insurance Contracts
Section 1 General Rules
Section 2 Contract of Insurance of the Person
Section 3 Contract of Property Insurance
Chapter III Insurance Company
Chapter IV Rules Governing Insurance Business
Chapter V Insurance Agents and Brokers
Chapter VI Supervision and Administration of the Insurance Industry
Chapter VII Legal Liability
Chapter VIII Supplementary Provisions

Chapter I General Provisions

Article 1 This law is enacted in order to regulate insurance activities, protect the legitimate rights and interests of parties involved in insurance activities, strengthen supervision and administration of the insurance industry, protect social and economic order and public interests, and promote the sound development of insurance business.

Article 2 The term "insurance" as mentioned in this law refers to a commercial insurance transaction whereby an insurance applicant, as contracted, pays insurance premiums to the insurer and the insurer bears an obligation to indemnify the insured for property loss or damage caused by a specific contingent accident that is agreed upon in the contract, or to pay the insurance benefits when the insured dies, is injured or disabled, suffers illness or reaches the age or time-limit agreed upon as set in the contract.

Article 3 All insurance activities conducted within the territory of the People's Republic of China shall be governed by this law.

Article 4 Insurance activities shall be conducted in compliance with laws and administrative regulations, with the respect for public morality and shall not infringe upon public interests of the society.

Article 5 The parties concerned in the insurance activities shall abide by the principle of good faith in the exercise of rights and performance of obligations.


Article 6 Insurance businesses must be conducted by insurance companies established in accordance with this Law and other insurance organizations as stipulated in laws or administrative regulations. No other entity or individual may operate insurance businesses.

Article 7 Any legal person or other organizations within the territory of the People's Republic of China that need domestic insurance coverage shall apply to the insurance company established within the territory of the People's Republic of China.

Article 8 Unless it is otherwise prescribed in any other law, the insurance industry shall subject to operation and administration separately from industries of banking, securities and trust operational agency, and the establishment of insurance company shall be separate from that of bank, securities and trust operational agency.

Article 9 The insurance supervision and control authority under the State Council shall exercise supervision and administration of the insurance industry in accordance with this Law.
The insurance supervision and control authority under the State Council shall, upon the need of duty performance, set up dispatch agencies, which shall perform the duty of supervision and administration under the authorization by the insurance supervision and control authority under the State Council.

Chapter II Insurance Contracts

Section 1 General Rules

Article 10 An insurance contract is an agreement whereby the rights and obligations concerning the insurance are specified and agreed by the insurance applicant and the insurer.
An insurance applicant means the party who enters into an insurance contract with an insurer and is obligated to pay the premiums under the contract.
An insurer refers to an insurance company which enters into an insurance contract with an applicant and is obligated to make indemnity or pay insurance benefits under the contract.

Article 11 In concluding an insurance contract, the applicant and the insurer shall reach agreements through consultation and follow the principle of fairness to determine the rights and obligations of all parties concerned.
The principle of voluntariness shall be followed in the conclusion of an insurance contract, except as otherwise provided by laws and administrative regulations.

Article 12 An applicant for the insurance of the person shall have insurable interests in the insured in the conclusion of an insurance contract.
The insured of property insurance shall have insurable interests in the subject matter of the insurance in the occurrence of insured accidents.
Insurance of the person refers to an insurance that takes life and body of the persons as the subject matter of the insurance.
Property insurance refers to an insurance that takes property and relevant interests as the subject matter of the insurance.
The insured refers to the person who is protected under a contract of insurance of the person or of property insurance and enjoys the right to claim for insurance benefits. An insurance applicant can be the insured.
Insurable interests mean the legally recognized interests of an insurance applicant or the insured in the subject matter of insurance.


Article 13 An insurance contract shall be concluded when an insurance applicant applies for insurance and the insurer agrees to underwrite the insurance. The insurer shall issue an insurance policy or other insurance certificate to the applicant in a timely manner.
The contract contents agreed by both parties concerned shall be specified on the insurance policy or other insurance certificate, and the parties concerned may also state the contract contents in other written forms upon an agreement.
The legally concluded insurance contract shall be valid upon the conclusion. Additional conditions or terms on the validity of the contract can be agreed by the applicant and the insurer.

Article 14 Once an insurance contract is concluded, the applicant shall pay the premium under the contract and the insurer shall begin to undertake the insurance liability from the time agreed upon.


Article 15 Unless otherwise stipulated in this Law or agreed in the insurance contract, the applicant may rescind the contract after it is concluded; However, the insurer may not rescind the contract after it is concluded.

Article 16 In concluding an insurance contract, when the insurer inquires about the relevant information concerning the subject matter of insurance or the insured, the insurance applicant shall make an honest disclosure.
The insurer is entitled to rescind the contract if the insurance applicant fails to perform the obligation of making an honest disclosure intentionally or due to gross negligence, thereby materially affecting the insurer from making a decision whether or not to agree with the underwriting or to increase the premium rate.
The right of an insurer to rescind a contract, as prescribed in the preceding paragraph, shall be extinguished without exercising over 30 days since the date the insurer knows the occurrence of accidents for rescinding. The insurer shall not rescind the contract which has been concluded for over two years and shall be obligated to make indemnity or pay insurance benefits for any occurrence of the insured accidents.
If an insurance applicant intentionally fails to perform his obligation of making honest disclosure, the insurer shall bear no obligation for indemnity or payment of insurance benefits for any insured accident occurred prior to the rescission of the contract, and shall not refund the premium paid.
If an insurance applicant fails to perform his obligation due to gross negligence, thereby seriously affecting the occurrence of insured accident, the insurer shall bear no obligation for indemnity or payment of insurance benefits for any insured accident occurred prior to the rescission of the contract, but shall refund the premium paid.
If an insurer has known the fact that the applicant fails to make a honest disclosure in the conclusion of a contract, the insurer may not rescind the contract and shall bear the obligation for indemnity or payment of insurance benefits for any insured accidents.
An insured accident refers to the accident covered by the insurance as agreed upon in the insurance contract.


Article 17 If an insurer provides standard terms for the conclusion of an insurance contract, it shall attach the standard terms to the policy provided to the applicant and explain the contents of the contract to the applicant.
An insurer shall give a note, which is enough to attract the attention of the applicant on the insurance application, the insurance policy or other insurance certificate, for the clause regarding the exemption of liability of the insurer as provided in the insurance contract, and shall make clear explanations in respect thereof to the applicant in written or oral form, otherwise such clause shall not be binding.


Article 18 An insurance contract shall contain the following particulars:
1. name and address of the insurer;
2. names and Residences of the insurance applicant and the insured, and the name and residence of the beneficiaries of insurance of the person;
3. the subject matter of insurance;
4. scope of cover and exclusions;
5. insurance term and commencement of obligation of the insurer;
6. amount insured;
7. premium and the way of its payment;
8. the way of payment of indemnity or insurance benefits;
9. liability arising from breach of contract and resolution of disputes; and
10. the date, month and year in which the contract is concluded.
An applicant and an insurer may reach agreements on particulars relating to the insurance.
An beneficiary refers to the person who enjoys the right to claim for insurance benefits as designated by the insured or the insurance applicant in a contract of insurance of the person. The insurance applicant or the insured may be the beneficiary.
The amount insured refers to the maximum amount that an insurer can bear the obligation of indemnity and payment of insurance benefits.

Article 19 For an insurance contract concluded with standard terms provided by the insurer, the following terms and conditions shall be invalid:
1. the insurer is exempted from the obligation in accordance with the law or the liability of applicant or insured is increased; and
2. the applicant, the insured or the beneficiary is excluded from the right provided in the law.


Article 20 An applicant and an insurer may, after consultation, alter the contents of an insurance contract.
To alter the contents of an insurance contract, the insurer shall make notes on the original insurance policy or other insurance certificate, or a written agreement regarding the alternation shall be concluded by the insurance applicant and the insurer.

Article 21 An applicant, an insured or a beneficiary shall notify the insurer of the occurrence of insured accident in a timely manner. Where an insured accident is not notified in a timely manner intentionally or due to gross negligence, with the result that it is difficult for the insurer to determine the nature, cause and extent of the loss, etc. of the accident, the insurer shall not bear the obligation of indemnity or payment of insurance benefits for the part unable to be determined, except for the insured accidents that the insurer has known its occurrence through other channels or should know its occurrence in a timely manner.


Article 22 Where a claim for indemnity or payment of insurance benefits is lodged with the insurer after the occurrence of the insured accident, the applicant, insured or the beneficiary shall, to best of their ability, provide the insurer evidence and other materials relating to the determination of the nature, cause and extent of loss of the accident.
If the provided evidence or materials are deemed as incomplete under the insurance contract, the insurer shall notify the applicant, the insured or the beneficiaries all at once for additional evidence or materials.


Article 23 An insurer shall, after the receipt of a claim for indemnity or for payment of insurance benefits, determine the matter without delay and notify the insured or the beneficiary of the determination result; For the complex case, the determination shall be made within 30 days, with the exception as otherwise agreed in the contract. For the case falling into the insurance coverage, the insurer shall perform its obligation of indemnity or payment of insurance benefits within 10 days after reaching an agreement on the indemnity or payment with the insured or the beneficiary. If there is an agreement in the insurance contract on the time limit for the indemnity or payment of insurance benefits, the insurer shall perform its obligation accordingly.
If an insurer fails to perform its obligations as prescribed in the preceding paragraph in a timely manner, the insurer shall compensate the insured or the beneficiary for any damage incurred thereby in addition to the payment of insurance benefits.
No entity or individual may interfere with the insurer's performance of its obligation for indemnity or payment of insurance benefits, nor shall it restrict the right of the insured or the beneficiary from obtaining the insurance benefits.


Article 24 For the case not falling into the insurance coverage, the insurer shall send a notice declining indemnity or payment of insurance benefits to the insured or the beneficiary in three days after the determination made in accordance with Article 23 of this Law with an explanation of reason.


Article 25 If the total amount of indemnity or insurance benefits is not determined within 60 days after the receipt of a claim for indemnity or insurance benefits, the insurer shall make the primary payment of minimum amount which can be determined by the evidence and material in hand, and shall accordingly pay the balance after the amount of indemnity or insurance benefits is finally determined.

Article 26 With respect to insurances other than life insurance, the right of the insured or the beneficiary to claim for indemnity or insurance benefits shall cease to exist if the insured or the beneficiary fails to exercised such right within two years from the date the insured or the beneficiary knows or should know the occurrence of the insured accident.
With respect to life insurance, the right of the insured or the beneficiary to claim for indemnity or insurance benefits shall cease to exist if the insured or the beneficiary fails to exercise such right within five years from the date the insured or the beneficiary knows or should know the occurrence of insurance accident.


Article 27 An insurer is entitled to terminate an insurance contract and not to refund the premiums if the insured or the beneficiary fabricates the occurrence of insurance accident which has not occurred, and lodge a claim to the insurer for indemnity or insurance benefits.
If the applicant, the insured or the beneficiary causes the occurrence of insurance accident on purpose, the insurer is entitled to terminate the insurance contract, shall bear no obligation for indemnity or insurance benefits, and except otherwise provided in Article 43 of this Law, shall not refund the premiums.
If, after an insurance accident occurs, the applicant, the insured or the beneficiary is found to have fabricated the cause of the accident or exaggerated the extent of loss with forged or altered relevant evidence, information or other proofs, the insurer shall bean no obligation of indemnity or insurance benefits for the portion which is fabricated or exaggerated.
If the applicant, the insured or the beneficiary is found to have committed any of the acts stipulated in the preceding three paragraphs and have resulted the payment of insurance benefits or other expenses by the insurer, such payment shall be refunded or indemnified for.


Article 28 Re-insurance means the assignment by an insurer of part of its underwriting to another insurer assuming the form of a contractor.
At the request of the re-insurance assignee, the re-insurance assignor shall inform in writing the reinsurance assignee of its own liability and all relevant information with respect to the original insurance.

Article 29 The re-insurance assignee shall not claim for the payment of premium from the original insurance applicant.
The insured or the beneficiaries of the original insurance shall not claim for indemnity or insurance benefits from the re-insurance assignee.
The re-insurance assignor shall not decline or delay the performance of the originally insurance liability on the pretext of non-performance of re-insurance liability by the re-insurance assignee.

Article 30 If there is any dispute between the insurer and the applicant, the insured or the beneficiary over the clauses in an insurance contract concluded with the standard terms provided by the insurer, such disputed clauses shall be interpreted in accordance with the general understanding. Where there are two or more interpretations for the contract clauses, the People's court or arbitration organizations shall interpret such disputed clauses in favor of the insured and the beneficiaries.

Section 2 Contract of Insurance of the Person

Article 31 An insurance applicant shall have insurable interests in the following persons:
1. the applicant himself;
2. the applicant's spouse, children and parents;
3. other member of the family or blood relatives other than those specified in the preceding paragraph for whom the applicant has or share the obligation of foster, support or maintenance; and
4. laborers who have a relationship of employment with the applicant.
Except the provisions of the preceding paragraph, if the insured consents to the applicant concluding a contract for him, the applicant shall be deemed as having insurance interest sin the insured.
An insurance contract shall be null and void if the applicant has no insurance interests in the insured.

Article 32 If the age of the insured stated by the applicant is not true and the true age does not meet the age limit agreed in the contract, the insurer may terminate the contract and refund the cash value of the insurance policy in accordance with the agreement in the contract. The exercise of right to rescind a contract by the insurer shall be subject to the provisions of Article 16 (3) (6) of this Law.
If the premium paid by the applicant is less than what is payable due to the misstatement by the applicant on the age of the insured, the insurer is entitled to rectify the mistake and demand the applicant to pay the balance, or to pay the insurance benefits according to the proportion of the premiums actually paid to the premiums payable.
If the premium paid by the applicant is more than what is payable due to the misstatement by the applicant on the age of the insured, the insurer shall refund the overpaid portion of premiums to the applicant.

Article 33 An applicant may not apply for insurance of the person taking death as the condition for the payment of insurance benefits for people incapable of civil acts; nor may the insurer underwrite.
Where parents apply for insurance of the person for their minor children, the restriction stipulated in the preceding paragraph shall not apply. However, the total amount of payments for death of the insured shall not exceed the limit prescribed by the insurance supervision and control authority under the State Council.


Article 34 A contract taking death as the condition for the payment of insurance benefits shall be null and void unless it is agreed by the insured with the amount of insurance approved by him.
An insurance policy issued pursuant to a contract taking death as the condition for payment of insurance benefits may not be transferred or pledged without the written consent of the insured.
Where parents apply for insurance of the person for their minor children, the restriction stipulated in the first paragraph of this Article shall not apply.


Article 35 An insurance applicant may pay the premium by a lump sum or by installments as agreed upon in the contract.

Article 36 If a contract specifies the payment of premiums by installments and the applicant has paid the first installment but fails to pay any subsequent installments within 30 days from the date of reminding from the insurer or within the agreed term of 60 days, the contract shall lapse, or the insurer shall reduce the amount insured in accordance with the contract, unless otherwise specified in the contract.
The insurer shall pay the insurance benefits in accordance with the contract for any insurance accident occurred on the insured within the specified term prescribed in the preceding paragraph, but can deduct the outstanding premiums.


Article 37 A contract which lapses in accordance with Article 36 of this Law can be reinstated provided that the insurer and the applicant have reached an agreement and that the applicant has paid the outstanding premiums. However, the insurer is entitled to terminate the contract if no agreement has been reached by both parties within two years from the date of the lapse of the contract.
When a contract is terminated in accordance with the provisions stipulated in the preceding paragraph, the insurer shall refund the cash value of the policy to the applicant in accordance with the contract.

Article 38 An insurer shall not resort to legal proceeding to demand the payment of premiums of life insurance from the applicant.

Article 39 The beneficiary of life insurance shall be designated by the insured or the applicant.
The designation of beneficiary by an applicant is subject to the approval of the insured. If an applicant applies for insurance of the person for the labourers that have employment relationship with him, the persons other than the insured and his blood relatives may not be designated as beneficiaries.
If the insured is a person incapable of civil acts or a person with limited capacity for civil acts, a beneficiary may be designated by his guardian.

Article 40 The insured or the applicant may designate one or more persons as beneficiary.
In the case that there are more than one beneficiaries, the insured or the applicant may specify the order of priority in their enjoyment of the insurance benefits and their respective proportions; if such proportions are specified, all the beneficiaries shall share the insurance benefits in equal proportion.

Article 41 The insured or the applicant may alter beneficiary and notify the insurer of the alternation in writing. The insurer shall make a note on the original policy or other insurance certificates upon receipt of the notice.
The alternation of beneficiary by an applicant shall be subject to the consent of the insured.

Article 42 In the case of death of the insured, the insurance benefits shall be treated as legacy of the insured. The insurer shall, in any of the following circumstances, perform the obligation to pay insurance benefits in accordance with the Law of Succession of the People's Republic of China:
1. there is no designated beneficiary, or the designation of beneficiary is not clear for determination;
2. the beneficiary dies before the insured and there is no other beneficiary being designated; or
3. the beneficiary forfeits or surrenders his beneficial right in accordance with the law and there is no other beneficiary being designated.
If the beneficiary and the insured die in the same event, and the order of death is not able to be determined, the death of the beneficiary shall be presumed earlier.


Article 43 When an applicant intentionally causes the death, disability or illness of the insured, the insurer shall bear no obligation to pay insurance benefits. In the case that the applicant has fully paid up premiums for two years or more, the insurer shall, in accordance with the contract, refund the cash value of the policy to others entitled.
If a beneficiary intentionally causes the death or disability of the insured, or attempts to cause the death of the insured, the beneficiary shall forfeit his right to claim insurance benefits.


Article 44 Where a contract specifies death of the insured as the condition for payment of insurance benefits and the insured commits suicide within two years from the date of conclusion or reinstatement of the contract, the insurer shall have no obligation to make such payment, unless the case that the insured is incapable of civil acts in committing suicide.
Where an insurer bears no obligation to pay insurance benefits in accordance with the preceding paragraph, the cash value of policy shall be refunded under the contract.


Article 45 Where the death or disability of the insured results from his committing of a crime or defying of any criminal compulsory measures in accordance with the law, the insurer shall bear no obligation to pay insurance benefits. If, however, the applicant has fully paid up premiums for two years or more, the insurer shall refund the cash value of insurance policy under the contract.


Article 46 Where an insurance accident such as death, disability, or illness of the insured results from the acts of a third party, the insurer is not entitled to claim against the third party by subrogation after payment of insurance benefits to the insured or the beneficiary. However, the insured or the beneficiary is still entitled to demand indemnity from the third party.

Article 47 Where an applicant terminates a contract, the insurer shall refund the cash value of the policy within 30 days after the receipt of notice of termination under the contract.

Section 3 Contract of Property Insurance  

Article 48 The insured may not claim for insurance benefits if he has no insurable interests in the subject matter of insurance in the occurrence of an insurance accident.

Article 49 Where a subject matter of insurance is transferred, the assignee of the subject matter of insurance shall inherit the right and obligation of the insured.
Where a subject matter of insurance is transferred, the insured or the assignee shall notify the insurer in a timely manner, but the cargo insurance contracts and contracts with otherwise agreements are exceptions.
Where the degree of risk is significantly raised due to the transfer of the subject matter of insurance, the insurer may, within 30 days after the receipt of the notice as specified in the preceding paragraph, increase the premiums under the contract or terminate the contract. In case that the contract is terminated, the insurer may, under the contract, retain the premiums for the period from commencement of insurance liability to the date of termination of the contract and refund the balance of the premiums to the applicant.
Where the insured or the assignee fails to perform his obligation of notification in accordance with the second paragraph of this Article, the insurer shall bear no obligation to pay the insurance benefits for any insurance accident caused by the significantly increased degree of risk of the subject matter of insurance due to the transfer.


Article 50 Cargo insurance contracts or insurance contracts for carrier's voyage shall not be terminated by the parties thereto subsequent to the commencement of insurance liability.

Article 51 The insured shall observe the relevant regulations on such areas as fire control, safety, production operation and labour protection, etc. to ensure the safety of the subject matter of insurance.
In accordance with the terms of the contract, the insurer may inspect the safety conditions of the subject matter of insurance and, make timely suggestions in writing to the applicant or the insured so as to eliminate unsafe factors and latent risks.
In the case that the applicant or the insured fails to perform his contractual obligations to ensure the safety of the subject matter of insurance, the insurer is entitled to ask for an increase in the premium or to terminate the contract.
The insurer may, with the consent of the insured, take preventive measures to ensure the safety of the subject matter of insurance.

Article 52 If the extent of risk on the subject matter of insurance significantly increases during the period of the contract, the insured shall, in accordance with the contract, notify the insurer in a timely manner, who is entitled to increase the premium or terminate the contract. In case the contract is terminated, the insurer may, in accordance with the contract, retain the premiums for the period from commencement of insurance liability to the date of termination of the contract, and refund the balance of the premiums to the applicant..
Where the insured fails to perform his obligation of notification specified in the preceding paragraph, the insurer shall bear no obligation to pay the insurance benefits for any insurance accident caused by the significantly increased extent of risk on the subject matter.


Article 53 Unless otherwise specified in the contract, the insurer shall reduce the premium and refund the correspondingly part thereof calculated on per diem basis in any of the following cases:
1. the circumstances on which the premium rate is based have changed and the extent of risks on the subject matter of insurance have noticeably been reduced; or
2. an obvious reduction occurs in the insurable value of the subject matter of insurance.

Article 54 Where an applicant requests termination of an contract prior to commencement of insurance liability, the applicant shall pay service charges to the insurer and the insurer shall then refund the premiums paid. If the applicant requests termination of the contract subsequent to commencement of insurance liability, the insurer may retain the premiums for the period from commencement of insurance liability to the date of termination of the contract, and refund the balance of the premiums to the applicant.

Article 55 Where the insurable value of a subject matter of insurance is agreed by the applicant and the insurer and specified in the contract, the agreed insurable value shall be the basis in the calculation of indemnity for the loss of the subject matter of insurance.
If the insurable value of a subject matter of insurance is not agreed by the applicant and the insurer, the actual value of the subject matter of insurance in the occurrence of insurance accident shall be the basis for the calculation of indemnity for the loss of the subject matter of insurance.
The amount insured shall not exceed the insurable value; The portion in excess shall be null and void, and the insurer shall refund the corresponding premiums.
Where the amount insured is less than the insurable value, the insurer shall bear obligation for indemnity in accordance with the proportion of the amount insured to the insurable value, unless otherwise stipulated in the contract.

Article 56 The applicant for double insurances shall inform all insurers concerned of the double insurances.
The total insurance benefits paid by all insurers underwriting double insurances shall not exceed the insurable value. Unless otherwise agreed in the contract, all insurers shall bear the obligation to pay insurance benefits according to the proportion of their respective amounts insured to the total amount insured.
Regarding the part the amount insured exceeds the insurable value, the applicant for double insurances may ask all insurers to refund the premiums in accordance with the proportion thereof.
Double insurances mean such insurance wherein an applicant enters into separate insurance contract with two or more insurers on the same subject matter of insurance, the same insurable interests and the same insurance accident, and the total amount insured exceeds the insurable value.

Article 57 In the occurrence of an insurance accident, the insured is obligated to take all necessary measures to prevent or mitigate losses.
The insurer shall bear all necessary and reasonable expenses incurred by the insured after the occurrence of the insured accident in taking measures to prevent or mitigate losses of the subject matter of insurance; the amount of such expenses borne by the insurer shall be calculated separately from the indemnity for the loss of the subject matter of insurance and it shall not exceed the amount insured in the maximum.


Article 58 In the case of partial loss of the subject matter of insurance, the applicant may terminate the contract within 30 days after indemnified by the insurer; unless otherwise specified in the insurance contract, the insurer may also terminate the contract.
In the case that the insurer terminates the contract, the insurer shall notify the applicant 15 days in advance of such termination and refund the premium for the portion of the subject matter of insurance which is not damaged after deducting the premium for the period from the date of the commencement of the insurance liability to the date of termination of the contract to the applicant.

Article 59 After the occurrence of insurance accident, if the insurer has paid in full the amount insured which is equal to the insurable value, the insurer shall retain all rights pertaining to the damaged subject matter of insurance; if the amount insured is less than the insurable value, the insurer shall obtain partial rights pertaining to the damaged subject matter of insurance pro rata of the amount insured to the insurable value.

Article 60 When the occurrence of insurance accident results from the damage to the subject matter of insurance caused by a third party, the insurer may, from the date when indemnity is paid to the insured, exercise by subrogation the right of the insured to demand indemnity against the third party up to the amount of indemnity paid.
After the occurrence of insurance accident referred to in the preceding paragraph, the insurer may, when paying indemnity, deduct therefrom a corresponding amount, which the insured has received as indemnity from the third party.
The right to claim for indemnity by subrogation exercised by the insurer in accordance with the first paragraph of this Article shall in no way affect the insured's right to claim for indemnity against the third party for the portion un-indemnified.


Article 61 If the insured waives the right to claim for indemnity against the third party after the occurrence of insurance accident and before the insurer pays the indemnity, the insurer shall bear no obligation for indemnity.
If the insured, without the insurer's consent, waives the right to claim for indemnity against the third party after indemnity is paid by the insurer, the waiver shall be null and void.
The insurer may deduct a corresponding sum from the amount of indemnity or ask the insured to refund the corresponding indemnity if it is not able to exercise the right to claim for indemnity by subrogation due to the intention or gross negligence of the insured.

Article 62 The insurer has no right to claim for indemnity by subrogation against any family member or staff member of the insured, unless the family member or staff member of the insured intentionally causes the insurance accident specified in the first paragraph of Article 60 of this law.


Article 63 When the insurer exercises the right to claim for indemnify by subrogation against a third party, the insured shall provide the insurer necessary documents and relevant information known to him.


Article 64 The insurer shall bear all necessary and reasonable expenses incurred by the insurer and the insured for the purpose of investigating and ascertaining the nature and cause of the occurrence of insurance accident, and the extent of loss or damage to the subject matter of the insurance.


Article 65 The insurer may, in accordance with the provisions of laws or the term of an insurance contract, directly indemnify a third party for loss or damage caused by the insured of liability insurance.
When an insured of liability insurance causes damages to a third party and the liability of the insured is determined, the insurer shall, upon the request of the insured, directly indemnify the third party. If the insured fails to actively make the request, the third party shall have the right to directly claim for insurance benefits for the part which should be indemnified
When the insured of liability insurance causes damages to a third party and the insured fails to indemnify the third party, the insurer may not pay the insurance benefits to the insured.
Liability insurance refers to the insurance of which the subject matter of insurance is the insured's liability to indemnify a third party in accordance with the law.


Article 66 If the insured of liability insurance is brought to arbitration or legal proceedings due to the occurrence of insurance accident which causes loss or damage to a third party, the insurer shall bear the cost of such arbitration or legal proceedings and other necessary and reasonable expenses paid by the insured, unless otherwise provided in the insurance contract.

Chapter III Insurance Company

Article 67 The establishment of an insurance company is subject to the approval of the insurance supervision and control authority under the State Council.
In the examination of application for the establishment of an insurance company, the insurance supervision and control authority under the State Council shall take into account the development of the insurance industry and the need for fair competition

Article 68 To establish an insurance company, the following requirements shall be met:
1. the major shareholders are of capacity of continuing profitability, in good standing, no record on significant violations of laws and regulations in the past three years and their net assets are no less than CNY200 million;
2. the articles of association are in conformity with this Law and the Company Law of the People's Republic of China;
3. having a minimum registered capital as prescribed in this Law;
4. having directors, supervisors and senior management personnel with professional knowledge and experience in business operations;
5. having a sound organizational structure and management systems;
6. having business premises conforming to requirements and other facilities relative to the insurance business; and
7. other conditions provided in the laws and administrative regulations and stipulated by the insurance supervision and control authority under the State Council.

Article 69 The minimum registered capital required for the establishment of an insurance company is CNY200 million.
The insurance supervision and control authority under the State Council may adjust the minimum amount of registered capital in light of the proposed scope of business and scale of operation of an insurance company; however, the minimum capital shall not be less than that stipulated in the first paragraph of this Article.
The registered capital of an insurance company shall be fully paid-up in monetary form.

Article 70 For the establishment of an insurance company, the applicant shall file a written application with and submit the following documents and materials to the insurance supervision and control authority under the State Council:
1. a formal written application stating the name, registered capital and the scope of business of the proposed insurance company;
2. a feasibility study report; and
3. a preparation program;
4. the business license or other background information of investors, and financial report for the previous year audited by an accounting firm;
5. the name list containing the person in charge of the preparation group, the proposed chairman of the board and managers who are approved by the investors and the person concerned; and
6. other information stipulated by the insurance supervision and control authority under the State Council.

Article 71 The insurance supervision and control authority under the State Council shall examine the application for the establishment of insurance company, make a decision approving or disapproving the application within six months from the date of receipt of the formal application to establish an insurance company and notify the applicant in writing. In case of disapproval, the insurance supervision and control authority under the State Council shall state reasons in a written document.

Article 72 An applicant shall complete preparation for the establishment of an insurance company within one year after the receipt of approval and shall not engage in insurance business activities during the preparation.

Article 73 After the completion of preparation, the applicant which has met the requirements for establishment specified in Article 68 of this Law may file an application for opening the business with the insurance supervision and control authority under the State Council.
The insurance supervision and control authority under the State Council shall make a decision approving or disapproving the application for opening the business within 60 days from the date of receipt of the application, and shall issue the insurance business permit to the applicant obtaining the approval. In case of disapproval, the applicant should be notified in writing of the reasons.

Article 74 The establishment of branch of an insurance company in the territory of the People's Republic of China shall be subject to the approval of the insurance supervision and control authority.
The branch of an insurance company do not possess the status of legal person; and it's civil liability shall be borne by the insurance company.

Article 75 To apply for the establishment of branch, an insurance company shall file a written application with the insurance supervision and control authority and submit such materials as follows:
1. a letter of application for establishment;
2. the three-year business development planning and market analysis materials for the proposed branch;
3. resume(s) of the proposed senior management personnel and relevant certificates; and
4. other materials stipulated by the insurance supervision and control authority under the State Council.

Article 76 The insurance supervision and control authority under the State Council shall examine the application of an insurance company for the establishment of branch and shall decide, within 60 days after receiving the application, whether or not to grant the approval. In case the application is approved, the insurance business permit shall be issued to the branch; In case of disapproval, the applicant shall be notified in writing of the reasons.

Article 77 The insurance company and its branches approved for establishment shall go through the formalities of registration at the administration department of industry and commerce by presenting the approval document and the insurance business permit, and accordingly obtain business license from the authority.

Article 78 The insurance business permit shall cease to be valid automatically if the insurance company or its branch fails to complete registration without any proper reasons within six months from the date of receipt of the insurance business permit.

Article 79 Where an insurance company plans to establish a subsidiary or a branch utside the territory of the People's Republic of China, such establishment shall be subject to the approval of the insurance supervision and control authority under the State Council.

Article 80 Where an foreign insurance company plans to establish a representative office within the territory of the People's Republic of China, such establishment shall be subject to the approval of the insurance supervision and control authority under the State Council. A representative office may not be engage in any insurance business activities.

Article 81 Directors, supervisors and senior management personnel of an insurance company shall be of good character, familiar with the insurance-related laws and administrative regulations, of the capabilities of operation and management needed to perform their duties, and obtain the qualifications approved by the insurance supervision and control authority prior to serving.
The scope for senior management personnel of an insurance company shall be determined by the insurance supervision and control authority under the State Council.

Article 82 No person shall be a director, a supervisor or a senior manager of an insurance company in the circumstance specified in Article 146 of the Company Law of the People's Republic of China or in any of the following circumstance:
1. the person who has been disqualified by the financial supervisory and regulatory body as a director, a supervisor, or a senior manager of any financial institution for the violation of laws or disciplines unless a period of five years has elapsed since the date of the disqualification, and
2. the lawyer, certified public account, or the professional from an asset evaluation agency or a certification body who was disqualified for practice for the violation of laws or disciplines unless a period of five years has elapsed since the date of the disqualification.

Article 83 The director, supervisor or senior management personnel of an insurance company shall bear the obligation of indemnity to the company for any losses caused by his violation of laws, administrative regulations or articles of association of the company in performing his duty.

Article 84 The approval of the insurance supervision and control authority shall be required for an insurance company in any of the following circumstance:
1. the change of name of the insurance company;
2. the change in the amount of the registered capital;
3. the change of business premises of the company or its branch;
4. the revocation of a branch;
5. division or merger of a company;
6. the amendment to the articles of association;
7. the change of shareholders whose capital contributions account 5% or more of the total capitalization of a limited liability company; or the change of shareholders who hold 5% or more shares in a joint-stock company; and
8. other changes as specified by the insurance supervision and control authority under the State Council.

Article 85 An insurance company shall employ professionals to set up the actuarial reporting system and the compliance reporting system.

Article 86 An insurance company shall, in accordance with the provisions stipulated by the insurance supervision and control authority, submit the relevant reports, statements, documents and information.
The solvency report, financial report, actuarial report, compliance report and other relevant reports, statements, documents and information must be truthful in recording insurance matters, and shall not have false records, misleading statements and material omissions.


Article 87 An insurance companies shall, in accordance with the provisions stipulated by the insurance supervision and control authority under the State Council, properly keep complete books, original certificates and related information concerning business activities.
The term to keep the books, original certificates and relevant information specified in the preceding paragraph shall be no less than five years for insurance period of less than one year, and ten years for insurance period of more than one year starting from the date of termination of the insurance contract.

Article 88 An insurance company shall report the hire and dismissal of accountant firms, asset valuation agencies, credit rating agencies and other intermediary service agencies to the insurance supervision and control authority and shall state the reason for the dismissal of accountant firms, asset valuation agencies, credit rating agencies and other intermediary service agencies.

Article 89 In the case of division or merger, or resolution of the meeting of shareholders or general assembly of shareholders, or the occurrence of causes for dissolution in accordance with the company's articles of association, the insurance company shall be dissolved only upon the approval of the insurance supervision and control authority under the State Council.
Those insurance companies which operate life insurance in their business line may not be dissolved, except for division, merger or revocation in accordance with the law.
An insurance company shall, in accordance with the law, form a liquidation group to carry out its liquidation.

Article 90 Upon the approval of the insurance supervision and control authority under the State Council, an insurance company in the circumstance specified in Article 2 of the Bankruptcy Law of the People's Republic of China or its creditors may, in accordance with the law, apply to the People's court for restructuring, reconciliation or bankruptcy; The insurance supervision and control authority under the State Council may also apply to the People's court for restructuring an insurance company or announcing bankruptcy and liquidation of an insurance company in accordance with the law.

Article 91 The bankruptcy property shall, after giving priority to paying off the expenses of bankruptcy proceedings and community liabilities, be used for the payment of debts in the following order:
1. owed wages, medical care, disability benefits, pension costs, basic endowment insurance which should transferred to employee's individual accounts, basic medical insurance costs, as well as other compensation due to its employees stipulated by laws and administrative regulations;
2. indemnity or payment of the insurance benefits;
3. unpaid social insurance expense other than that as specified in the paragraph (1) of this Article and taxes; and
4. ordinary bankruptcy claims.
Where the bankruptcy property is insufficient to cover all the claims having the same order of priority, settlement shall be made on a pro rata basis.
Salaries of directors, supervisors and senior management of the bankrupt insurance company shall be calculated in accordance with the average wage of employee.

Article 92 In the case that an insurance company which operates life insurance in its business line is revoked or declared bankrupt in accordance with law, all life insurance contracts and reserve funds in its possession must be transferred to other insurance companies that run life insurance in their business activities; if no agreement can be reached with respect to such transfer with other insurance companies, the insurance supervision and control authority under the State Council shall, for the purpose thereof, designate an insurance company that operates life insurance in its business line to accept the transfer.
Where the life insurance contracts and reserve funds, as prescribed in the preceding paragraph, are transferred to or accepted by another insurance company designated by the insurance supervision and control authority under the State Council, the legitimate rights and interests of the insured and the beneficiary shall be preserved.

Article 93 When an insurance company ceases its business operations in accordance with law, its insurance business permit shall be revoked.

Article 94 Unless it is otherwise provided in this Law, the Company Law of the People's Republic of China shall apply to insurance companies.

Chapter IV Rules Governing Insurance Business 

Article 95 The scope of business of an insurance company shall be as follows:
1. insurance of the person which includes life insurance, health insurance and accident and injury insurance, etc;
2. property insurance, which includes insurance against loss or damage to property, liability insurance, credit insurance and guarantee insurance, etc.; and
3. other business concerning insurance which are approved by the insurance supervision and control authority under the State Council.
No insurer may concurrently engage in both business of property insurance and insurance of the person; however, an insurance company engaged in the business of property insurance may, upon approval by the insurance supervision and control authority under the State Council, operate the short-term health insurance and accidental injury insurance.
An insurance company shall operate its insurance business only within the scope of business approved by the insurance supervision and control authority under the State Council.


Article 96 Upon the approval of the insurance supervision and control authority under the State Council, an insurance company may engage in the following reinsurance business with respect to the insurance business prescribed in article 95 of this Law:
1. outward reinsurance; and/or
2. inward reinsurance.

Article 97 An insurance company shall deposit 20% of its registered capital as a security in the bank designated by the insurance supervision and control authority under the State Council, which shall not be used with the exception of liquidation of the company.

Article 98 An insurance company shall, in accordance with the principle of safeguarding the interests of the insured and guaranteeing the solvency, set aside various liability reserve.
The specific measures for setting aside and carrying forward liability reserve by insurance companies shall be formulated by the insurance supervision and control authority under the State Council.

Article 99 An insurance company shall, in accordance with the law, set aside provident funds.

Article 100 An insurance company shall, in accordance with the law, contribute to the insurance protection fund.
The insurance protection fund shall be managed in a concentrated way and be used in a planned way in any of the following circumstance:
1. to provide relief to the applicants, the insured and the beneficiaries when an insurance company is revoked or declared bankruptcy;
2. to provide relief to the insurance company which accepts life insurance contracts of another insurance company being revoked or declared bankrupt in accordance with the law; and
3. other circumstances stipulated by the State Council.
The specific measures for the accumulation, administration and use of the insurance protection fund shall be formulated by the State Council.

Article 101 An insurance company shall maintain a minimum solvency commensurate with the size of its business and the degree of risk. After deduction of amount of its actual liability from the value of its actual assets, the balance shall not be less than the amount specified by the insurance supervision and control authority under the State Council. In the case that the balance is less than the amount stipulated, the insurance company shall, in accordance with the requirement prescribed by the insurance supervision and control authority under the State Council, take corresponding measures to make up for the deficit.

Article 102 For an insurance company engaged in property insurance business, the premiums retained for the current year shall not exceed four times the combined total of its actual capital plus its provident fund.

Article 103 The liability borne by an insurance company for each risk unit, that is, the maximum loss or damage caused by the occurrence of a single insurance accident, shall not exceed 10% of the combined total of its actual capital plus its provident fund. The portion in excess of this sum shall be re-insured.
The classification of risk units by an insurance company shall be in line with the provisions stipulated by the insurance supervision and control authority under the State Council.

Article 104 The classification method of risk units and plan against huge risks of an insurance company shall be filed with the insurance supervision and control authority under the State Council.

Article 105 An insurance company shall make re-insurance in accordance with the relevant provisions stipulated by the insurance supervision and control authority under the State Council, and prudently choose re-insurance assignee.

Article 106 An insurance company shall employ its funds in a steady manner, follow the safety principle.
The employment of funds by an insurance company is limited to the following forms:
1. bank deposits;
2. purchasing and selling of bonds, stocks and negotiable securities such as securities investment fund shares;
3. investment of real estate; and
4. other forms of employment of funds stipulated by the State Council.
The specific administrative measures for the employment of funds by an insurance company shall be formulated by the insurance supervision and control authority under the State Council in accordance with the preceding two paragraphs.


Article 107 Upon the approval of the insurance supervision and control authority under the State Council together with the securities supervision and control authority under the State Council, an insurance company may set up an insurance assets management company.
An insurance assets management company shall comply with the Securities Law of the People's Republic of China and other laws and administrative regulations in securities investment activities.
The measures for the administration of insurance assets management companies shall be formulated by the insurance supervision and control authority under the State Council together with other departments concerned under the State Council.

Article 108 An insurance company shall, in accordance with the provisions stipulated by the insurance supervision and control authority under the State Council, set up systems of affiliate transaction and information disclosure.

Article 109 The controlling shareholders, the actual control persons, directors, supervisors, senior management of an insurance company may not take advantage of affiliated transactions to harm the interests of the company.


Article 110 An insurance company shall, in accordance with the provision stipulated by the insurance supervision and control authority under the State Council, truly, accurately and completely disclose such major issues as financial accounting reports, risk management and operation of insurance products, etc.

Article 111 Personnel of an insurance company engaged in sale of insurance shall have good character and have the expertise required by sales of insurance. The behavior norms and administrative measures for the insurance sales personnel shall be formulated by the insurance supervision and control authority under the State Council.

Article 112 An insurance company shall set up an insurance agent registration management system, strengthen the training and management of insurance agents, and may not instigate or induce insurance agents for activities in breach of good faith.

Article 113 An insurance company and its branches shall use the insurance business permit in accordance with the law, and may not transfer, lease, or lend the insurance business permit.

Article 114 An insurance company shall, in accordance with the provisions stipulated by the insurance supervision and control authority under the State Council, work out fair and reasonable insurance terms and premium rates, and may not harm the legitimate rights and interests of the applicant, the insured and the beneficiaries.
An insurance company shall, in accordance with the agreements in the contract and regulations in this Law, perform its obligation to indemnify or pay the insurance benefits in a timely manner.

Article 115 An insurance company shall follow the principle of fair competition in its business activities and shall not involve unfair competition.

Article 116 An insurance company and its employees shall not commit any of the following acts in their business activities:
1. deceiving the applicant, the insured or the beneficiary;
2. concealing material information relevant to the insurance contract to the applicant;
3. hindering the applicant from performing his obligation of making a full and accurate disclosure as provided in this Law or inducing him not to perform such obligation;
4. giving or promising the applicant, the insured or the beneficiary to give them premium rebates or other benefits which are not specified in the insurance contract; or
5. refusing to perform its obligation of indemnity or payment of insurance benefits agreed in the insurance contract in accordance with the law;
6. defrauding insurance benefits or other improper benefits by making a false claim through intentionally fabricating an insurance accident which has not actually occurred, making up an insurance contract, or intentionally inflating the extent of loss caused by an insurance accident which has actually occurred;
7. misappropriating, withholding or occupying premiums;
8. entrusting unqualified institutions to engage in insurance sales activities;
9. seeking improper benefits for other institutions or individuals in the development of insurance business;
10. engaging in such illegal activities as obtaining costs through fabricating insurance intermediary business or surrender by making use of insurance agents, insurance brokers or insurance assessment institutions;
11. damaging the commercial credibility of competitors in the form of fabricating or spreading false facts, or disrupting the order of insurance market by other acts of unfair competition;
12. revealing commercial secrets of the applicant and the insured known in the operational activities; and
13. other acts in breach of laws, administrative regulations and rules provided by the insurance supervision and control authority under the State Council.


Chapter V Insurance Agents and Insurance Brokers 

Article 117 An insurance agent is an entity or individual that has been authorized by an insurer to transact insurance business on its behalf within the scope of authorization and gets in return agent's commissions to be collected from the insurer.
Insurance agents include professional insurance agents specializing in the insurance agency business and concurrent-business insurance agents concurrently running the insurance agency business.

Article 118 An insurance broker is an entity that, in the interest of the applicant, provides intermediary services between the applicant and the insurer for the conclusion of an insurance contract and receives a commission therefor in accordance with law.

Article 119 An insurance agent or insurance broker shall meet the requirement provided by the insurance supervision and control authority under the State Council and shall obtain the insurance agency business permit or the insurance brokerage business permit issued by the insurance supervision and control authority.

Article 120 A professional insurance agent or broker established in the form of company shall meet the requirement for minimum registered capital provided in the Company Law of the People's Republic of China.
The insurance supervision and control authority under the State Council shall, in accordance with the business scope and operational scale of a professional insurance agent or broker, adjust the requirement for the minimum registered capital, which shall not be less than that provided in the Company Law of the People's Republic of China.
The registered capital or capital contribution of a professional insurance agent or broker must be fully paid in monetary form.

Article 121 The senior management personnel of an professional insurance agent or broker shall be of good character, familiar with the insurance-related laws and administrative regulations, of the capabilities of operation and management needed to perform their duties, and obtain the qualifications approved by the insurance supervision and control authority prior to serving.

Article 122 An individual insurance agent, an agency practitioner of an insurance agent or a brokerage practitioner of an insurance broker shall have good character and expertise required by the insurance agency business or insurance brokerage business.

Article 123 An insurance agent or an insurance broker shall have its own business premise and set up a special book to record the income and expenditure of the insurance agency or brokerage business.

Article 124 An insurance agent or an insurance broker shall, in accordance with the provisions stipulated by the insurance supervision and control authority under the State Council, deposit security or apply for professional liability insurance.


Article 125 An individual insurance agent in transacting life insurance business as an agent shall not concurrently accept the entrustments of two or more insurers.

Article 126 An insurer to entrust an insurance agent for insurance agency business shall enter into an agency agreement with the insurance agent in which the rights and obligations of both parties are agreed upon in accordance with the law.

Article 127 An insurer shall be liable for the acts of its agents when they transact insurance business on behalf of the insurer in pursuance of the authorization.
Where an insurance agent signs a contract on behalf of an insurer without the authorization of the insurer, beyond the authorization of the insurer or after the termination of authorization of the insurer, in which the applicant has good reasons to believe that it has the authority of the insurer, the agency act shall be effective. However, the insurer may, in accordance with the law, investigate the responsibility of the insurance agent that oversteps the authority delegated to it.

Article 128 An insurance broker shall be liable for loss or damages caused to the applicant or the insured due to his fault in the course of transacting insurance business.

Article 129 A party concerned in the insurance activities may entrust an independent assessment agency which is legally established or related professional personnel to make assessment and identification of an insurance accident.
The agencies and personnel accepted the assessment and identification of an insurance accident shall be legal, independent, objective and fair in the assessment and identification, and no entity or individual may interfere with the aforesaid activities.
The entities and personnel prescribed in the preceding paragraph shall, in accordance with the law, be liable for loss or damages caused to the insurer or the insured intentionally or due to faults.

Article 130 Insurance commission shall only be paid to the insurance agents or insurance brokers, not to any other persons.

Article 131 No insurance agent, insurance broker or their practitioners may commit any of the following acts in transacting insurance business:
1. deceiving the insurer, applicant, insured or beneficiary;
2. concealing material information with respect to the insurance contract;
3. hindering the applicant from performing his obligation of making a full and accurate disclosure, or inducing the applicant not to perform his obligation of making a full and accurate disclosure;
4. giving or promising to give the applicant, the insured or the beneficiary benefits other than that provided in the insurance contract;
5. coercing, inducing or restricting the applicant to enter into an insurance contract by taking advantage of the administrative powers and position or of the occupational facilities, or by employing other illegitimate means;
6. forging or altering without authorization an insurance contract, or providing false evidence for the party of an insurance contract;
7. misappropriating, withholding or occupying insurance premiums or insurance benefits;
8. seizing improper benefits for other institutions or individuals by taking advantage of business facilities;
9. defrauding insurance benefits by colluding the applicant, the insured or the beneficiary; or
10. revealing commercial secrets of the insurer, the applicant or the insured known in the business activities.

Article 132 The provisions in the first paragraph of Article 86 of this Law and Article 113 of this Law shall respectively apply to insurance agents and insurance brokers.

Chapter VI Supervision and Administration of the Insurance Industry 

Article 133 The insurance supervision and control authority shall, in accordance with this Law and the duty stipulated by the State Council, supervise and regulate the insurance industry following the principles of lawfulness, openness and fairness to maintain the insurance market in order and protect the legitimate rights and interests of the applicant, the insured and the beneficiaries.

Article 134 The supervision and control authority under the State Council shall, in accordance with laws and administrative regulations, formulate and issue rules and regulations with respect to the supervision and administration of the insurance industry.

Article 135 The insurance terms and premium rates of an insurance related to the social public interests, of a compulsory insurance in accordance with the law or of a newly developed life insurance shall be approved by the insurance supervision and control authority under the State Council, which shall follow the principles of protection of social public interests and of prevention of unfair competition in the examination, and the terms and premium rates of other insurances shall be filed with the insurance supervision and control authority.
The specific measures for the examination & approval and filing of insurance terms and premium rates shall be formulated by the insurance supervision and control authority under the State Council in accordance with the provisions prescribed in the preceding paragraph.

Article 136 Where an insurance company violates laws, administrative regulations or relevant provisions prescribed by the insurance supervision and control authority under the State Council in its terms and premium rates, the insurance supervision and control authority shall order the insurance company to stop use and rectify such terms and premium rates in a time limit, and if the circumstances are serious, may forbid the insurance company to file new insurance terms and premium rates in a specific term.


Article 137 The insurance supervision and control authority under the State Council shall establish and improve the supervisory system of solvency to monitor the solvency of insurance companies.


Article 138 For insurance companies insufficient of solvency, the insurance supervision and control authority under the State Council shall list it as the key regulatory target and take the following measures in accordance with the specific circumstance:
1. ordering to increase capitals or to re-insurance;
2. restriction on business scope;
3. restriction on paying dividends to its shareholders;
4. restriction on purchasing fixed assets or on operation cost scale;
5. restriction on the form and proportion in using funds;
6. restriction on the establishment of branch;
7. ordering the company to auction bad assets and to transfer insurance business;
8. restriction on the salary level of directors, supervisors and senior management personnel;
9. restriction on commercial advertising; or
10. ordering to stop accepting new business.

Article 139 Where an insurance company fails to set aside or carry forward various of liability reserve or to re-insure in breach of this Law, or seriously violates this law in the use of funds, the insurance supervision and control authority may order it to rectify in a time limit and to adjust responsible persons and relevant management personnel.

Article 140 If the insurance supervision and control authority announces a decision on the rectification of an insurance company in a time limit in accordance with Article 139 of this Law, but the insurance company fails to rectify in the time limit, the insurance supervision and control authority under the State Council may decide to select insurance professionals or to designate relevant personnel of the insurance company to compose a group for the rectification of the company.
The name of the company to be rectified, reason of rectification, members of the rectification group and the time limit for rectification shall be stated in the decision of rectification with an announcement.

Article 141 The rectification group is entitled to monitor the routine business of the rectified insurance company, in which the responsible person and relevant management personnel shall perform their duties under the supervision of the rectification group.

Article 142 The original business of the rectified insurance company shall be proceeded in the course of rectification. However, the insurance supervision and control authority under the State Council may order it to stop part of its original business, to stop accepting new business or to adjust the use of funds.

Article 143 Where the rectified insurance company has corrected its breach of this Law and resumed normal operation, the rectification group shall report the case to the insurance supervision and control authority under the State Council, which shall approve the termination of rectification with an announcement.

Article 144 The insurance supervision and control authority under the State Council shall take over an insurance company in any of the following circumstance:
1. a serious shortage of solvency; or
2. damaging social public interests in breach of this Law which may seriously jeopardize or have seriously jeopardized the company's solvency;
The credit-debt relationship of the company being taken over shall remain unchanged.

Article 145 The specific measures for the composition of takeover group and the implementation of takeover shall be determined with an announcement by the insurance supervision and control authority under the State Council.

Article 146 At the expiration of takeover period, the insurance supervision and control authority under the State Council may decide to extend the takeover period, which shall not exceed two years.

Article 147 Where an insurance company being taken over has resumed normal operating capacity at the expiration of takeover period, the insurance supervision and control authority under the State Council shall decide to terminate the takeover with an announcement.

Article 148 Where an insurance company being rectified or being taken over is in the circumstance prescribed in Article 2 of the Enterprise Bankruptcy Law of the People's Republic of China, the insurance supervision and control authority under the State Council may, in accordance with the law, apply to the People's court for the restructure or liquidation of the company.

Article 149 Where an insurance company is revoked its insurance business permit in accordance with the law due to illegal operation, or its solvency is lower than the requirement stipulated by the insurance supervision and control authority under the State Council, which will seriously jeopardize the insurance market order and damage public interests, the insurance supervision and control authority under the State Council may revoke the company with an announcement and arrange a liquidation group in a timely manner in accordance with the law.

Article 150 The insurance supervision and control authority under the State Council is entitled to require the shareholders or the actual controller of an insurance company to provide relevant information and materials within a specific term.

Article 151 Where the shareholders of an insurance company seriously harm the interests of the company by making use of affiliated transactions, which will endanger the solvency of the company, the insurance supervision and control authority under the State Council shall order them to correct, and may, prior to their correction, restrict their rights of shareholders. For those refused to correct, the insurance supervision and control authority under the State Council may order them to transfer their shares in the company.

Article 152 The insurance supervision and control authority under the State Council may, in accordance with the need of performance of supervision and administration, make a supervision talk with the directors, supervisors and senior management personnel of an insurance company and ask them to explain major issues relating to the business activities and risk management of the company.

Article 153 Where an insurance company is at the period of rectification, takeover, revocation and liquidation or at significant risks, the insurance supervision and control authority under the State Council may take the following measures to directors, supervisors, senior management personnel or the person directly liable of the company:
1. notifying the exit administration to prevent their exits in accordance with the law;
2. applying to the judicial authority for prohibiting them from transferring, assignment or disposing their properties in other forms, or setting other rights at their properties.

Article 154 The insurance supervision and control authority under the State Council may, in accordance with the law, take the following measures in the performance of its duty:
1. conducting on-site inspection on insurance companies, insurance agents, insurance brokers, insurance assets management company and representative offices of foreign insurance institutions;
2. entering the suspected premises for investigation and evidence collection;
3. inquiring the parties concerned as well as entities and individual relating to the investigated case and requiring them to explain the issues relating to the investigated case;
4. referring and copying such information as property right registration concerning the investigated case;
5. referring and copying the financial accounting information and other related documents and materials of insurance companies, insurance agents, insurance brokers, insurance assets management companies, and representative offices of foreign insurance institutions as well as entities and individuals relating to the investigated case; and sealing the documents and materials that may be transferred, concealed or destroyed;
6. querying bank accounts of insurance companies, insurance agents, insurance brokers, insurance assets management and representative offices of foreign insurance institutions suspected of illegal operation as well as of entities and individuals relating to the suspected violations;
7. upon the approval of the primarily liable person the insurance supervision and control authority, applying to the People's court for freezing or sealing the properties involved in the case such as illegal funds which have been or may be transferred or concealed supported by evidence, or the key evidence is concealed, forged or destroyed;
The measures in the items (1), the items (2) and the items (5) of the preceding paragraph to be taken by the insurance supervision and control authority shall be approved by the liable person of the insurance supervision and control authority, and the measure in the items (6) shall be approved by the liable person of the insurance supervision and control authority under the State Council.
When the insurance supervision and control authority conducts inspection or investigation in accordance with the law, the inspectors or investigators shall present the legal document and a notice of inspection and investigation, and the numbers of them shall be no less than two. The inspected or investigated entity or individual is entitled to refuse any inspection or investigation in breach of the aforesaid provisions.

Article 155 When the insurance supervision and control authority performs its duty in accordance with the law, the inspected and investigated entity or individual shall coordinate.

Article 156 The staff of insurance supervision and control authority shall be fair and honest, and be devoted to their duties in accordance with the law, may not seek improper benefits by taking advantage of their positions, and may not reveal commercial secrets of relevant entities and individuals.

Article 157 The insurance supervision and control authority under the State Council shall set up an information-sharing mechanism for supervision and administration with the People's Bank of China and other financial supervision bodies under the State Council.
When the insurance supervision and control authority conducts inspection or investigation in the performance of its duty in accordance with the law, departments concerned shall coordinate.

Chapter VII Legal Liability

Article 158 Any act establishing insurance companies, insurance assets management companies without authorization in breach of this law or illegally operating commercial insurance business shall be banned by the insurance supervision and control authority, the illegal proceeds shall be confiscated and a fine of one to five times legal proceeds shall be imposed; where there is no illegal proceeds or the illegal proceeds is less than CNY200,000, a fine ranging from CNY200,000 to CNY1 million shall be imposed.

Article 159 Any acts establishing professional insurance agents and insurance brokers, or illegally engaging in the insurance agency business or brokerage business without obtaining the insurance agency business permit or insurance brokerage business permit in breach of this Law shall be banned by the insurance supervision and control authority. the illegal proceeds shall be confiscated and a fine of one to five times legal proceeds shall be imposed; where there is no illegal proceeds or the illegal proceeds is less than CNY50,000, a fine ranging from CNY50,000 to CNY300,000 shall be imposed.

Article 160 Any insurance company operating beyond the approved business scope in breach of this Law shall be ordered to rectify in a time limit by the insurance supervision and control authority, its illegal proceeds shall be confiscated and a fine of one to five times illegal proceeds shall be imposed. Where there is no illegal proceeds or the illegal proceeds is less than CNY100,000, a fine ranging from CNY100,000 to CNY500,000 shall be imposed. The insurance company failed to rectify in the time limit or caused a serous consequence shall be ordered to stop business for rectification or be revoked the business license.

Article 161 Any insurance company in breach of Article 116 of this Law shall be ordered to rectify, be imposed a fine ranging from CNY50,000 to CNY300,000, and may, in serous cases, be restricted business scope, be ordered to stop accepting new business, or be revoked business permit by the insurance supervision and control authority.


Article 162 Any insurance company in breach of Article 84 of this Law shall be ordered to rectify and be imposed a fine ranging from CNY10,000 to CNY100,000 by the insurance supervision and control authority.


Article 163 Any insurance company committing one of the following acts in breach of this Law shall be ordered to rectify and be imposed a fine ranging from CNY50,000 to CNY300,000 by the insurance supervision and control authority:
1. underwriting insurance exceeding the limit of amount insured if the circumstances are serious; or
2. underwriting insurance for the person in capable of civil acts on the condition of death for the payment of insurance benefits.

Article 164 Any insurance company committing one of the following acts in breach of this Law shall be ordered to rectify, be imposed a fine ranging from CNY50,000 to CNY300,000, and may, in serous cases, be restricted business scope, be ordered to stop accepting new business, or be revoked business license by the insurance supervision and control authority.
1. failing to deposit security in accordance with the provision or using the security in breach of the provision;
2. failing to draw or carry forward various liability reserves in accordance with the provision;
3. failing to pay insurance protection fund or draw provident fund in accordance with the provision;
4. failing to re-insure in accordance with the provision;
5. failing to use insurance funds in accordance with the provision;
6. establishing a branch without approval; or
7. failing to file insurance terms and premium rates for approval.


Article 165 Any insurance agency or insurance broker in breach of Article 131 of this Law shall be ordered to rectify, be imposed a fine ranging from CNY50,000 to CNY300,000, and may, if the circumstances are serious, be revoked the business permit by the insurance supervision and control authority.


Article 166 Any insurance agency or insurance broker committing one of the following acts in breach of this Law shall be ordered to rectify, be imposed a fine ranging from CNY20,000 to CNY100,000, and may, if the circumstances are serious, be ordered to stop business for rectification or be revoked the business permit by the insurance supervision and control authority.
1. failing to deposit security or apply for professional liability insurance in accordance with the provision; and
2. failing to set up special books to record business income and expenditure in accordance with the provision.

Article 167 Those employing unqualified personnel at job or on practition in breach of this law shall be ordered to rectify and be imposed a fine ranging from CNY20,000 to CNY100,000 by the insurance supervision and control authority.

Article 168 Those transferring, leasing and lending business permit in breach of this law shall be imposed a fine ranging from CNY10,000 to CNY100,000, and may, if the circumstances are serious, be ordered to stop business for rectification or be revoked the business permit by the insurance supervision and control authority.

Article 169 Those committing one of the following acts in breach of this law shall be ordered to rectify in a time limit, and if refusing to rectify in the time limit, be imposed a fine ranging from CNY10,000 to CNY100,000 by the insurance supervision and control authority.
1. failing to submit or keep reports, statements, documents and materials in accordance with the provision, or failing to provide relevant information and material;
2. failing to file insurance terms and premium rates for record in accordance with the provision; and
3. failing to disclose information in accordance with the provision.


Article 170 Those committing one of the following acts in breach of this Law shall be ordered to rectify, be imposed a fine from CNY100,000 to CNY500,000, and may, in serous cases, be restricted the business scope, be ordered to stop accepting new business or be revoked the business permit by the insurance supervision and control authority:
1. preparing or providing false report, statement, document or material;
2. refusing or hindering inspection in accordance with the law; and
3. failing to use the approved or filed insurance terms or premium rates in accordance with the provision.


Article 171 Besides the punishment imposed by the insurance supervision and control authority respectively in accordance with Articles 160 to 170 hereof to the insurance company, insurance assets management company, professional insurance agent or insurance broker in breach of the Law, the directly liable management and other directly liable personnel of such companies shall be given a warning, be imposed a fine ranging from CNY10,000 to CNY100,000, and may, if the circumstances are serious, be revoked the qualification for serving or as practitioner.


Article 172 Any individual insurance agent in breach of this Law shall be subject to a warning and a fine up to CNY20,000 imposed by the insurance supervision and control authority. if the circumstances are serious, the fine may range from CNY20,000 to CNY100,000.

Article 173 Any representative office established in the territory of the People's Republic of China by a foreign insurance institution without the approval of the insurance supervision and control authority under the State Council shall be banned and be subject to a fine ranging from CNY50,000 to CNY300,000 by the insurance supervision and control authority under the State Council.
Any representative office established in the territory of the People's Republic of China by a foreign insurance institution engaging in insurance business activities shall be ordered to rectify, be confiscated its illegal proceeds and be imposed a fine of one to five times illegal proceeds by the insurance supervision and control authority. Where there is no illegal proceeds or the illegal proceeds is less than CNY200,000, a fine ranging from CNY200,000 to CNY1 million shall be imposed, and the chief representative may be ordered to be replaced. if the circumstances are serious, the business license of the representative office may be revoked.

Article 174 Any insurance applicant, the insured or any beneficiary committing one of the following acts for insurance fraud which does not constitute a crime shall be subject to administrative punishment:
1. the insurance applicant intentionally fabricates a subject matter of insurance to defraud insurance benefits;
2. fabricating an insurance accident which does not occurred, or making up false cause of accident or exaggerating the extent of loss to defraud insurance benefits; and
3. intentionally causing an insurance accident to defraud insurance benefits;
If the person, who identifies, assesses or proves an insurance accident, purposely provides the insurance applicant, the insured or the beneficiary false documents for insurance fraud, he/she shall be subject to the punishment in accordance with the provision in the preceding paragraph.

Article 175 Those violate any provisions of this Law and have caused damages shall undertake the civil responsibility.

Article 176 Those refusing and hindering the insurance supervision and control authority and its staff to conduct inspection and investigation in accordance with the law in no violent or threating methods shall be subject to administrative penalties for public security.

Article 177 The liable person concerned if the circumstances are serious which violate the provisions of laws or administrative regulations shall be banned to engage in the insurance industry in a specific term or even forever.


Article 178 The supervision and administration staff of the insurance supervision and control authority in any of the following circumstances shall be subject to the punishment:
1. approval of establishment of insurance institution in breach of provisions;
2. examination and Approval of insurance terms and premium rates in breach of provisions;
3. on-site inspection in breach of provisions;
4. inquiry of accounts or freezing funds in breach of provisions;
5. revealing commercial secrets of entities and individuals concerned;
6. imposition of administrative punishment in breach of provisions; and
7. other acts that constitute abuse of power and dereliction of duty.

Article 179 Those violate any provisions of this Law and constitute a crime shall bear the criminal liability.

Chapter VIII Supplementary Provisions 

Article 180 An insurance company shall be the member of the insurance industry association. An insurance agent, an insurance broker, or an insurance assessment agency may be the member of the insurance industry association.
The insurance industry association is a social organization as legal person for the self-regulation of the insurance industry.

Article 181 This Law shall also be applicable to commercial insurance business operated by legally established insurance organizations other than insurance company.

Article 182 The Maritime Code of the People's Republic of China shall be applicable to marine insurance. For matters where the Maritime Code does not specify, this Law shall apply.

Article 183 This Law shall be applicable to Chinese-foreign equity insurance companies, wholly foreign-funded insurance companies and subsidiaries of foreign insurance companies; where other laws and administrative rules and regulations otherwise provide, such provisions shall prevail.

Article 184 The State supports the development of insurance businesses, which facilitate agricultural production. Agricultural insurance shall be governed by other laws and administrative rules and regulations.
For compulsory insurance, where other laws and administrative rules and regulations otherwise provide, such provisions there shall prevail.

Article 185 This Law shall enter into force as of October 1, 2009.