Administrative Provisions on Insurance Companies (Revised in 2004)
Administrative Provisions on Insurance Companies (Revised in 2004)
Administrative Provisions on Insurance Companies (Revised in 2004)
Order of the China Insurance Regulatory Commission [2004] No. 3
May 13, 2004
The Administrative Provisions on Insurance Companies were adopted at the Chairman's executive meeting of the China Insurance Regulatory Commission on March 15, 2004. They are hereby issued and shall be implemented as of June 15, 2004.
Chairman: Wu Dingfu
Administrative Provisions on Insurance Companies
Contents
Chapter I General Provisions
Chapter II Insurance Institutions
Section 1 Establishment of Institutions
Section 2 Institutional Changes
Section 3 Insurance Licenses
Section 4 Winding Up and Liquidation
Section 5 Investments in Insurance Companies
Chapter III Management of Insurance Business
Chapter IV Terms of Insurance and Premium Rates
Chapter V Insurance Funds and Solvency of Insurance Companies
Chapter VI Supervision and Inspection
Chapter VII Supplementary Provisions
Chapter I General Provisions
Article 1 For the purpose of strengthening the supervision and administration of insurance companies, maintaining an orderly insurance market, protecting the lawful rights and interests of insured parties and promoting the healthy development of the insurance industry, these Provisions are formulated in accordance with the Insurance Law of the People's Republic of China (hereinafter referred to as the Insurance Law), the Company Law of the People's Republic of China (hereinafter referred to as the Company Law) and other relevant laws and regulations.
Article 2 The China Insurance Regulatory Commission (hereinafter referred to as the CIRC) shall be responsible for the overall supervision and administration of insurance companies in accordance with the law and pursuant to the authorization of the State Council.
Institutions appointed by the CIRC shall perform the functions for which they are authorized by the CIRC.
Article 3 The term "insurance company" as referred to in these Provisions means a commercial insurance company established on approval of an insurance regulatory institution and registered in accordance with the law.
The term "insurance company branch" as referred to in these Provisions means a commercial institution or business service institution lawfully established by an insurance company, including any company branch, company head sub-branch, sub-branch, bureau or distribution and service department thereof.
The term "insurance institution" as referred to in these Provisions means a insurance company and its sub-branch.
Chapter II Insurance Institutions
Section 1 Institutional Establishment
Article 4 The establishment of an insurance company shall be subject to the approval of the CIRC.
No entity or individual may engage, either directly or indirectly, in commercial insurance operations within the People's Republic of China without CIRC approval.
Article 5 The following principles shall be observed in establishing an insurance company:
1. the company shall be established in compliance with all laws and administrative regulations;
2. the company shall be established in a manner consistent with the macroeconomic policies of the state and the development strategies of the insurance industry; and
3. the company shall be established in a way conducive both to fair competition and to the healthy development of the insurance industry.
Article 6 The following conditions shall be met in establishing an insurance company:
1. investors in the insurance company shall be qualified investors and a reasonable shareholding structure shall be established;
2. the insurance company's articles of association shall be drafted in accordance with the provisions of the Insurance Law of the People's Republic of China and the Company Law of the People's Republic of China;
3. the minimum registered capital of the insurance company shall be RMB 200 million, and shall be fully paid up;
4. the senior managers of the insurance company shall meet the relevant qualifications for their respective positions and any other conditions specified by the CIRC;
5. the insurance company shall have a comprehensive organizational structure and management system; and
6. the insurance company shall have a place of business and office equipment compatible with the development of its business.
Article 7 In establishing an insurance company, the applicant shall file a written application with the CIRC and submit the following materials in triplicate:
1. an application for establishment, which shall contain the name, registered capital and business scope of the company to be established;
2. a feasibility report, which shall include a business development plan, draft articles of association and business management strategies;
3. the preparatory establishment plan;
4. the investors' share subscription agreements, and documents evidencing the approval of the board of directors or, in the absence of a board of directors, the equivalent decision-making body, for each investor in the insurance company;
5. the business license of or other background materials on the investors, and their balance sheets and profit and loss statements for the previous year as audited by a certified accountant;
6. a list of the names of, and personal statements of, the individual acknowledged as the leader of the preparatory group by investors, the proposed chairman of the board of directors and the proposed general manager; and
7. any other materials required by the CIRC.
Article 8 The CIRC shall examine any application for establishment of an insurance company, and shall make a decision to approve or decline the preparatory establishment of the company within 6 months of receiving the complete set of application materials. In the event that the CIRC declines the application, it shall explain its reasons to the applicant in writing.
Article 9 During the period in which it examines an application for establishment of an insurance company, the CIRC shall educate the relevant investors about the risks of investing in the insurance industry.
The CIRC shall listen to the proposed chairman of the board of directors and the proposed general manager about their market development strategies, business development plans and the implementation of an internal control system for the company to be established, and shall take such factors into consideration in deciding whether to approve or decline the application for preparatory establishment.
Article 10 Where an applicant is granted approval by the CIRC to undertake preparatory establishment of an insurance company, it shall complete the preparatory establishment work within 1 year. In the event that it fails to complete such work within the time limit for any justifiable reason, the preparatory establishment period may be extended for 3 months subject to the approval of the CIRC. In the event that the applicant fails to complete the work within the extended time limit, the CIRC approval documents for preparatory establishment shall be invalidated automatically.
In such a case, the relevant institution shall not engage in any insurance business activities.
In principle, no investor may be replaced, withdrawn or added during the preparatory establishment period. If any investor is replaced, withdrawn or added without approval, the approval documents for preparatory establishment shall be invalidated automatically.
Article 11 After the preparatory establishment work has been completed, the applicant shall file an application with the CIRC to commence business operations, and shall submit the following materials in triplicate:
1, an application to commence business operations;
2. the transcript of the initial meeting on establishment of the company;
3. its articles of association;
4. the names of the shareholders and their respective holdings as a proportion of the company's shares, the capital verification certification issued by a capital verification institution with good credit standing, and photocopies of the original documents evidencing the lodging of capital funds in the relevant bank account;
5. the business licenses of or other background materials on the shareholders, and their balance sheets and profit and loss statements for the previous year;
6. the resumes and relevant certification materials of the proposed senior managers of the company, an introduction to the company structure and personnel, the resumes of the actuaries and their relevant certification materials;
7. documents evidencing ownership of or usage rights in respect of the proposed business premises;
8. a 3-year business plan and reinsurance plan;
9. a plan describing the insurance products to be offered; and
10. a report on the installation of computer equipment and network construction.
Article 12 The CIRC shall, within 60 days of receiving the application documents to commence business operations, approve or decline the application. In the event that the CIRC approves the application, it shall issue the applicant with license to engage in insurance business.
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