Circular of the CIRC on Issues Concerning Further Strengthening the Regulation of Motor Vehicle Insurance

Circular of the CIRC on Issues Concerning Further Strengthening the Regulation of Motor Vehicle Insurance

Bao Jian Fa [2006] No. 19

March 2, 2006

Property insurance companies, Insurance Regulatory Bureaus and China Insurance Association:

For the purpose of deepening the regulatory system of motor vehicle insurance, strengthening the standard management of auto insurance businesses, standardizing the business and conduct of auto insurance and promoting the rapid and sound development of auto insurance business, the relevant issues are notified as follows:

I. Further strengthening the regulation over the motor insurance premium rate and strictly restricting the lowering of the upper limits thereof
1. Insurance companies shall scientifically and reasonably adjusting the benchmark premium rates pf auto insurance products. From 1 June 2006, the sum of all the preferential offerings granted by insurance companies to policyholders, including free-compensation preferential treatment and other preferential treatment based on individual persons and autos shall not be higher than 30% of the benchmark premium rate of auto insurance products.
2. The insurance companies that adjust the current premium rate of auto insurance products shall file with China Insurance Regulatory Commission (the "CIRC") before 1 April 2006. The overall level of the newly filed benchmark premium rate of auto insurance shall be no higher than that prior to such adjustment.
3. Insurance companies shall be prudential in adopting the adjustment of the premium rate of auto insurance.
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