Circular of the People's Bank of China on Issuing the Interim Regulations on the Administration of Insurance
Circular of the People's Bank of China on Issuing the Interim Regulations on the Administration of Insurance
Circular of the People's Bank of China on Issuing the Interim Regulations on the Administration of Insurance
Yin Fa [1996] No.255
July 25, 1996
Branches of the People's Bank of China of all provinces, autonomous regions, municipalities directly under the Central government, and People's Insurance Company of China, China Pacific Insurance Company, Ping'an Insurance Corporation of China, Tian An Property Insurance Corporation, Da Zhong Insurance Co., and Insurance Company of Xinjiang Corps,
The Interim Regulations on the Administration of Insurance have been formulated by the People's Bank of China under the Insurance Law of the People's Republic of China to strengthen the supervision and regulation of the insurance industry and to promote the healthy development of the insurance business and are hereby issued to you for earnest implementation in accordance therewith. Please report to us if you have any problems or suggestions during the implementation.
Interim Regulations on the Administration of Insurance
CHAPTER I GENERAL PROVISIONS
Article 1 This set of regulations are formulated with a view to strengthening the supervision and administration of the insurance business to promote its healthy development in accordance with the "Insurance Law of the People's Republic of China" (hereinafter referred to as the "Insurance Law").
Article 2 As the supervision and administrative department of financial affairs for the State, the People's Bank of China is responsible for supervising the insurance business under the leadership of the State Council in the following aspects:
1. Examine, approve and administer the establishment, change and termination of business of insurance agencies;
2. Formulate and revise rules and premium rates for major kinds of insurance; and
3. Supervise, administer and examine various insurance businesses and audit their accounts; check and prohibit the unauthorized insurance agencies and illegal or disguised insurance businesses.
Insurance companies carry out their insurance business according to law shall be free from any interference of local governments, government departments at all levels, social organizations and individuals.
Article 3 The insurance companies as referred to in this set of regulations are those set up with the approval of the People's Bank of China including legally registered property, personal, re-insurance and other kinds of insurance companies.
The subdivisions of insurance companies as referred to in this set of regulations are branch companies, liaison offices, business departments and representative offices of insurance companies. Such subdivisions must not be set up in any other forms unless otherwise authorized by the State.
The insurance agencies as referred to in this set of regulations are insurance companies and their subdivisions and other agencies engaged in insurance business, under the approval by the People's Bank of China.
CHAPTER II ESTABLISHMENT, CHANGE AND TERMINATION OF BUSINESS OF INSURANCE AGENCIES
Article 4 An insurance company should be established fully in line with the following principles:
1. Conforms to the need of the development of the national economy;
2. Separation of property from personal insurance;
3. Rational distribution and fair competition; and
4. Stresses of economic performance.
Article 5 When applying to establish an insurance company and its subdivisions, the applicant should have the following conditions:
1. An insurance company which conducts insurance business nationwide should have a paid in cash capital of not less than RMB500 million; an insurance company which conducts insurance business within a designated area should have a paid in cash capital of not less than RMB200 million; an insurance company which is set up in the location of a provincial, an autonomous regional, a municipal or a city which enjoys the provincial status in planning, government should have a total operation fund of not less than RMB50 million.
2. Chairman, vice-chairman, president and vice-president of an insurance company, president and vice-president of a branch company, chief and deputy chief of a liaison office and business department (hereinafter referred to as leading responsible persons) should acquire qualifications set by the People's Bank of China.
3. More than 60% of the employees of the insurance company should have engaged in insurance business and graduated from insurance or relevant departments of universities or colleges. An insurance company which engages in life insurance business should have at least one actuary recognized by the People's Bank of China.
4. An insurance company should have a definite business site and office facilities which can well accommodate its business and staff members.
5. Shareholders of an insurance stock company of limited-liability should acquire shares of the company in accordance with the regulations of the People's Bank of China in respect to investment to financial institutions.
6. For applying for establishment of a branch company, the insurance company should have been operational for more than one year with good performance, with an appropriate repayment ability, a complete internal management system, and without any record of serious legal violations and major prosecutions.
7. Other conditions as required by the People's Bank of China.
Article 6 An insurance company may apply for the establishment of subdivisions in accordance with the increased amount of insurance premium proceeds.
One branch company can be applied for establishment in the area of its business activities whenever its premium proceeds increase by RMB100 million.
A branch company may apply for the establishment of one subdivision within the area of its jurisdiction whenever its insurance premium proceeds increase by RMB50 million.
A branch company or subdivision may apply for the establishment of one liaison office within the area under its jurisdiction whenever its insurance premium proceeds increase by RMB20 million.
An insurance company can only establish one branch company in one city.
Article 7 Subdivisions of insurance companies may apply for changing their names provided that their business performance is good. A subdivision of a branch company may apply for changing its name into a branch company once its premium proceeds reach RMB40 million; and a liaison office may apply for changing its name into a subdivision of a branch company once its premium proceeds reach RMB10 million.
Article 8 The People's Bank of China exercises two-level examination and approval for the establishment and the change of name of the insurance companies and its subdivisions.
1.The Head Office of the People's Bank of China may examine and approve the establishment and the change of names of the following agencies:
(1) Establishment of insurance companies;
(2) Establishment of the branch companies of insurance companies, and changes of the name of a subdivision of a branch company into a branch company;
(3) Establishment of representative offices of insurance companies; and
(4) Establishment of pilot insurance agencies.
2. Branch offices of the People's Bank of China in provinces, autonomous regions, municipalities or cities enjoying provincial status in planning may examine and approve the establishment and the changes of the name of the following agencies:
(1) Establishment of subdivisions of branch companies of insurance companies;
(2) Establishment of liaison offices and the changes of their names into subdivisions of branch companies; and
(3) Establishment of business departments and the changes of their names into subdivisions of branch companies.
Before approvals to the establishment of a subdivision or change of name of a liaison office into a subdivision the matter should be reported to the Head Office of the People's Bank of China for the record. It shall be regarded as approved if the People's Bank of China does not raise any objections within 30 days beginning from the date of receiving the documents for the record.
Article 9 The establishment of an insurance company should go through stages of preparation and starting business.
Article 10 An applicant should submit the following materials in applying for the establishment of an insurance agency:
1. Application report for the establishment of the insurance agency;
2. Feasibility study report on the establishment of the insurance agency;
3. The establishment plan and the background of the investors, including the time for the establishment, examining and approving department, legal person representative, registered capital, and the financial situation of the applicant in the latest three years;
4. Resumes of the leading responsible persons for the establishment; and
5. Other materials as required to be submitted by the People's Bank of China.
Article 11 The time the People's Bank of China needs to approve the application for the establishment of an insurance company is three months, and if the People's Bank of China does not approve after three months, the applicant should not submit the same application within six months
Article 12 After approval by the People's Bank of China, the establishment of an insurance company should be completed within six months; if it is not completed, the original documents approving its establishment shall become invalid automatically.
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