Circular on Further Strengthening Investigation and Penalty of Illegal Acts by Insurance Companies in Their Intermediary Business and Cleaning up and Restructuring the Insurance Agency Market

Circular on Further Strengthening Investigation and Penalty of Illegal Acts by Insurance Companies in Their Intermediary Business and Cleaning up and Restructuring the Insurance Agency Market

Bao Jian Fa [2011] No. 1

January 1, 2011

All insurance regulatory bureaus,

For the purposes of consecutively making more efforts in investigating and penalizing illegal acts of insurance companies in their intermediary business and exerting a force to control the disorder of the insurance agency market, the China Insurance Regulatory Commission (CIRC) decides that in the first half of 2011, inspection work over intermediary business of insurance companies should be further carried out (hereinafter collectively referred to as "special inspection") and in the second half, work of cleaning up and restructuring the insurance agency market should be launched (hereinafter collectively referred to as the "cleaning-up"). Relevant issues are hereby set out as follows:

I. Further make more efforts in investigating and penalizing illegal acts of insurance companies in their intermediary business.
1. Purposes of inspection
Continuous and deep special inspection shall be carried out over problems exposed in inspections of last two years by continuously following the idea of gradual depth, strict investigation and serious punishment, achievements in respects of investigation and punishment shall be consolidated and expended, the order in insurance intermediary market shall be regulated further, regulatory authority shall be strengthened, the insurance intermediary regulatory work mechanism shall be improved and the capability and level of regulatory leaders shall be upgraded.
2. Key points of inspection
With respect to the illegal, inauthentic and nontransparent cooperation relations on business and finance, etc. between insurance companies and insurance intermediaries, key inspection shall continue to focus on such outstanding problems of insurance companies as resorting to deception, inflating costs, illegal extracting funds, etc. through intermediary business and channels. These problems mainly include:
(1) Extracting funds by affiliating direct business to insurance intermediaries;
(2) Extracting funds by affiliating direct business to insurance salesmen;
(3) Extracting funds by falsely increasing the number of insurance salesmen;
(4) Extracting funds by falsifying invoices and falsely increasing business management costs through intermediaries;
(5) Extracting funds by committing false surrender and claims through intermediaries;
(6) Illegally transferring interests to interested units and individuals through intermediaries;
(7) Establishing private coffer with extracted funds, embezzling, corrupting or misapplying the extracted funds by taking advantage of duty; or
(8) Other relevant illegal or irregular problems through intermediary business or channels.
3.
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