Circular on Issuing the Administrative Measures for the Capital Security Deposits of Insurance Companies

Circular on Issuing the Administrative Measures for the Capital Security Deposits of Insurance Companies

Bao Jian Fa [2011] No.39

July 7, 2011

All insurance companies:

In order to further strengthen supervision over the capital security deposits of insurance companies, protect the interests of policy-holders and maintain the stable and healthy development of the insurance market, the China Insurance Regulatory Commission has formulated the Administrative Measures for the Capital Security Deposits of Insurance Companies (hereinafter referred to as "the Measures") by revising the Interim Administrative Measures for the Capital Security Deposits of Insurance Companies (Bao Jian Fa [2007] No.66, hereinafter referred to as "the Interim Measures"). It is hereby issued to you for your compliance and implementation.

In order to realize the effective connection and smooth transition of the new measures and the old measures, all insurance companies shall, if the withdrawn capital security deposits do not comply with the provisions hereof, handle with the matter in the any of the following ways according to different circumstances:

Article 1 Where any bank in which the capital security deposits are deposited does not comply with the provisions hereof and but complies with the requirements of the Interim Measures, the capital security deposits may, upon the expiration of the deposit term, be transferred to a bank which complies with the provisions hereof;

Article 2 Where any place where the capital security deposits are deposited does not comply with the provisions hereof but complies with the requirements of the Interim Measures, the capital security deposits may, upon the expiration of the deposit term, be transferred to a place which complies with the provisions hereof;

Article 3 Where the amount of any capital security deposit is less than CNY10 million (or in any foreign currency equivalent to such amount), the insurance company shall, increase the capital security deposit to the required amount upon the expiration of the deposit term;

Article 4 Where any clause of the Agreement for Capital Security Deposits fails to comply with the provisions hereof, the insurance company shall, upon the expiration of the deposit term, modify such clause when signing a new agreement for capital security deposits; or

Article 5 Any other violations of the provisions hereof shall be rectified and corrected.

All insurance companies shall conduct self-inspections of the withdrawal, filing and disposal of capital security deposits according to the Measures and submit a written report on self-inspections before August 5, 2011.

Administrative Measures for the Capital Security Deposits of Insurance Companies

Chapter I General Provisions

Article 1 In order to further strengthen supervision over the capital security deposits of insurance companies, protect the interests of policy-holders and maintain the stable and healthy development of the insurance market, the Measures is formulated in accordance with the Insurance Law of the People's Republic of China (hereinafter referred to as the Insurance Law).

Article 2 The term "insurance company" as mentioned herein refers to any commercial insurance company which is established with the approval of any insurance regulatory authority and is registered in accordance with the law.

Article 3 The term "capital security deposit" as mentioned herein refers to funds which are withdrawn by any insurance company, after its establishment, according to 20% of the total of its registered capital in accordance with the provisions of the Insurance Law and which shall not be used except for the settlement of debts when the insurance company is liquidated.

Article 4 the China Insurance Regulatory Commission (hereinafter referred to as the CIRC) shall regulate the capital security deposits of insurance companies in accordance with the law.
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