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Insurance Law of the People's Republic of China - 1995

Adopted at the 14th meeting of the Standing Committee of the Eighth National People's Congress on June 30, 1995 Amended in accordance with the Decision on Modifying the Insurance Law of the People's Republic of China adopted at the 30th Meeting of the Standing Committee of the Ninth People's Congress

 

Content
Chapter I General Provisions
Chapter II Insurance Contract

Section 1 General Provisions
Section 2 Property Insurance Contract
Section 3 Life Insurance Contract
Chapter III Insurance Company
Chapter IV Insurance Operational Rules
Chapter V Supervision and Administration of the Insurance Business
Chapter VI Insurance Agents and Insurance Brokers
Chapter VII Legal Liability
Chapter VIII Supplementary Provisions

Chapter I General Provisions

Article 1 This law has been formulated with a view to standardizing the insurance activities, protecting the legitimate rights and interests of parties to insurance activities, strengthening the supervision and administration of the insurance business and promoting its healthy development.
Article 2 Insurance used in this law refers to the act of payment of premiums by the insurants to insurers and the responsibility of the insurers to give indemnity to the insurants in case of losses to property of the insurants caused by a specific contingency or perils of death, injury, sickness of the insured upon the stipulated age according to terms as set in the contracts.
Article 3 All insurance activities within the territory of the People's Republic of China shall be governed by this law.
Article 4 Insurance activities shall be subject to the rule of laws and administrative regulations, be in compliance with the social ethics and the principle of free will.
Article 5 The parties concerned in insurance activities shall abide by the principle of good faith in the exercise of rights and performance of obligations.
Article 6 Insurance companies shall be set up according to this law to engage in commercial insurance business. No other entity or individual is allowed to engage in such business.
Article 7 Legal persons and other organizations which want to be insured within the territory of the People's Republic of China shall enter into insurance policy documents with the insurance companies within the territory of the People's Republic of China.
Article 8 In carrying out business, insurance companies shall follow the principle of fair competition. Illicit competition is not allowed.
Article 9 Insurance supervisory and regulatory body under the State Council shall exercise supervision and administration of the insurance business according to the provisions of this law.


Chapter II Insurance Contract
Section 1 General Provisions
Article 10 An insurance contract is an agreement for defining insurance rights and obligations of the insurants and the insurers.
An insurant refers to a person who has signed insurance contract with an insurer and undertakes the obligation of paying insurance premiums according to the amount stipulated in the insurance contract.
An insurer refers to an insurance company which has signed insurance contracts with the insurant and undertakes the responsibility to pay indemnity or insurance money to the latter.
Article 11 In signing an insurance contract, the insurant and the insurer shall observe the principle of fairness, mutual benefit, reaching agreements through consultation and free will without harming the public interest.
Insurance companies or other entities are not allowed to sign insurance contracts with others by coercion except otherwise provided by law or administrative decrees or regulations.
Article 12 An insurant shall own the insurable interest in the objects of insurance.
If an insurant has no insurable interest in the objects of insurance, the insurance contract shall be invalid.
Insurable interest refers to the interest of the insurant in the objects of insurance recognized by law.
Objects of insurance refer to property or related interest insured or life and health of a person insured.
Article 13 An insurance contract shall hold after the insurant applies for insurance and the insurer agrees to underwrite the insurance and the two sides have reached agreement on the clauses of the contract.
The insurer shall issue insurance policies or other insurance certificates to the insurant in a timely manner and specify on the insurance policies or other insurance documents the contents of the contracts agreed by the two sides. The insurant and the insurer, upon agreement, may also conclude insurance contracts in the form of written agreement other than those provided for in the preceding paragraph.
Article 14 After an insurance contract is concluded, the insurant shall pay premium as agreed upon in the contract and the insurer shall start to undertake insurance liabilities at the time agreed upon.
Article 15 The insurant may terminate the insurance contract after the contract is signed except otherwise provided for by this law or by the insurance contract.
Article 16 The insurer is not allowed to terminate the insurance contract after the contract is signed except otherwise provided for by this law or by the insurance contract.
Article 17 In concluding an insurance contract, the insurer should explain the contents of the clauses of the insurance contract and may raise inquiries on matters concerning the objects of insurance or the insurant, and the insurant shall make true representations.
If the insurant conceals facts deliberately and refuses to perform the obligations of making true representations or fails to perform the obligations of making representations due to negligence that would be enough to affect the insurer from making the decision of whether or not to agree to accept the insurance or raise the insurance premium, the insurer has the right to terminate the insurance contract.
If the insurant deliberately refuses to perform the obligations of making true representations, the insurer shall not undertake to pay indemnity or insurance money for insured risks that occurs before the contract is terminated and shall not return the insurance premium.
If the insurant fails to perform the obligations of making representations due to negligence, thereby seriously affecting the occurrence of insured risks, the insurer shall not undertake to pay indemnity or insurance money for contingency that occurs before the contract terminates but may return the insurance premium.
Insured risks refer to the contingencies or perils covered by the insurance as agreed upon in the insurance contract.
Article 18 If an insurance contract provides for the exemption of liabilities for the insurer, the insure shall clearly state in before signing the insurance contract. If no clear statement is made about it, the clause shall not be binding.
Article 19 An insurance contract shall contain the following:
1. Name and domicile of the insurer;
2. Names and residences of the insurant and the insured and the name and residence of the beneficiaries of life insurance.
3. Objects of insurance;
4. Insurance liability and liability exemption;
5. Insurance term and the starting time of insurance liabilities;
6. Insured value;
7. Insured amount;
8. Premium and the method of payment;
9. The method of payment of insurance indemnity or insurance money;
10. Liabilities for breach of contract and the handling of disputes;
11. The year, month and date in which the contract is signed.
Article 20 The insurant and the insurer may reach agreement on related matters other than those stated in the preceding paragraph.
Article 21 The insurant and the insurer, after consultation, may alter the contents of the insurance contract within the valid period of the insurance contract.
In altering the contents of an insurance contract, the insurer shall take notes on the original insurance policies or other insurance documents or attach a rider or a written agreement on the alteration signed by the insurant and the insurer.
Article 22 The insurant, the insured or beneficiaries shall notify the insurer of the occurrence of the insured risks in time after they have learned about them.
The insured refers to a person who is protected by the property or life insurance contract and who enjoys the right to insurance claims. An insurant may be an insured.
A beneficiary refers to a person who has been designated by the insured or the insurant to enjoy the right to insurance claims. The insurant or the insured may be the beneficiary.
Article 23 In claiming for indemnity or payment according to an insurance contract after an insured risk occurs, the insurant, the insured or the beneficiaries are obliged to provide evidence or materials to prove the nature and causes of the contingency and losses caused by it.
If the insurer deems the evidence or materials provided incomplete according to the agreement in the insurance contract, the insurer shall notify the insurant, the insured or the beneficiaries and demand for additional evidence or materials.
Article 24 After receiving the claim by the insured or beneficiaries for compensation or payment of insurance money, the insurer shall make a timely verification and notify the insured or beneficiary of the verification results; perform the obligations of compensation or payment within ten days after reaching an agreement on the compensation or payment with the insured or beneficiaries if the case is of insured liability. The insurer shall make compensation or payment according to the insured amount and according to the time limit for compensation or payment as agreed in the insurance contract.
If an insurer has failed to perform the obligations provided for in the preceding paragraph, the insurer shall compensate for the losses arising therefrom in addition to the payment of insurance money.
No entity or individual is allowed to illegally interfere in the performance by the insurer of the liabilities to compensation or payment; nor shall it limit the right of the insured or beneficiaries from obtaining the insurance money.
The insured amount refers to the maximum amount for compensation or insurance money payment to be paid by the insurer.
Article 25 If the insurer does not deem a contingency as insured liability after receiving the claims for compensation or insurance money from the insured or beneficiaries, the insurer shall issue a notice to insured or beneficiaries of the refusal of the claim.
Article 26 The insurer shall pay in advance according to the minimum amount determined by the evidence or materials if the amount for compensation or payment cannot be determined within 60 days starting from the date of receiving the insurance claims and related evidence and materials. The differences shall be made up for after the insurer finally determines the amount of compensation or payment.
Article 27 The right to claims for compensation or insurance payment by the insured or beneficiaries covered by insurance other than life insurance shall cease to exist if it is not exercised within two years starting from the date when the insured risk is known.
The right to claims for compensation or insurance payment by the insured or beneficiaries covered by life insurance shall cease to exist if it is not exercised within five years starting from the date of the occurrence of the insured risks.
Article 28 If the insured or beneficiaries falsify the occurrence of insured risks which have not occurred and claim for compensation or insurance payment, the insurer has the right to terminate the insurance contract, with the insurance premiums not to be returned.
If the insurant, the insured or beneficiaries deliberately fabricate the occurrence of the insured risks, the insurer has the right to terminate the insurance contract and shall refuse to perform the obligations of compensation or insurance payment, except otherwise provided for in the first paragraph of Article 64 of this law, with the insurance premiums not to be returned.
If, after an insured contingency occurs, the insurant, the insured or beneficiaries are found to have forged or fabricated related certificates, materials or other evidence to prove the causes of the insured risks or for exaggerating the losses, the insurer shall not compensate or pay for the part falsified.
If the insurant, the insured or beneficiaries are found to have committed one of the acts listed in the preceding three paragraphs that have caused the insurer to pay the insurance money or other expenses, the payment shall be returned or compensated for.
Article 29 If an insurer transfers part of a liability assumed to another insurer, it is re-insurance.
At the request of the re-insurance underwriter, the re-insurer shall make representations of its own liabilities or the related information of the original insurance to the re-insurance underwriter.
Article 30 The re-insurance underwriter shall not claim for the payment of premium from the insurant of the original insurance contract.
The insured or beneficiaries of the original insurance contract shall not claim for compensation or insurance money from the re-insurance underwriters.
The re-insurer shall not refuse to perform or delay the performance of the originally insured liability on the pretext of non-performance of the re-insurance liability by the re-insurance underwriter.
Article 31 If the clauses of an insurance contract are in dispute among the insurer and the insurant, the insured or beneficiaries, the people's court or arbitration organizations shall make interpretations favorable to the insured and beneficiaries.
Article 32 The insurer or re-insurance underwriter shall be obliged to keep confidential the information about the operations and property as well as the privacy of the insurant, the insured, the beneficiary or the re-insurer it has got to know in handling the insurance business.

Section 2 Property Insurance Contract
Article 33 A property insurance contract is an insurance contract with the property or related interests as the object of insurance.
The property insurance contract that appears in this section is called "contract" for short, except otherwise specified.
Article 34 The insurer shall be notified of the transfer of the objects of insurance and the insurance contract shall be altered with the consent of the insurer to continue to underwrite the policy. But the transport insurance contracts and contracts with otherwise agreements are exceptions.
Article 35 When the insured liability starts for the transport insurance contract and the voyage insurance for means of transport, the parties to the contract may not terminate the contract.
Article 36 The insured shall observe the relevant regulations on fire, safety, production operations and labor protection and protect the objects insured.
According to the contract, the insurer may carry out safety checks of the objects insured and timely put forward written proposals to the insurant or the insured to eliminate unsafe factors or hidden dangers.
If the insurant or the insured has failed to perform its due obligations concerning the safety of the objects insured, the insurer has the right to demand additional insurance premiums or terminate the contract.
The insurer may, with the consent of the insured, adopt precautionary measures in order to safeguard the objects insured.
Article 37 If within the validity period of the contract, the risks of the objects of insurance have increased, the insured shall notify the insurer in good time according to the contract and the insurer has the right to claim for additional insurance premiums or terminate the contract.
If the insured fails to perform the obligation of notifying the insurer of the increased risks, the insurer shall not undertake to compensation for the occurrence of the insured contingencies that occur due to the increase in the risks of the objects insured.
Article 38 The insurer shall reduce insurance premiums and return the corresponding premiums on the daily basis if any of the following cases occurs, except otherwise provided for:
1. The circumstances on which the premium rating is based have changed and the risks concerning the objects insured have markedly been reduced.
2. The insured value of the objects of insurance has markedly been reduced.
Article 39 If, before the insured liability starts, the insurant demands termination of the contract, the insurant shall pay commissions to the insurer and the insurer shall return the premiums paid. If, after the insured liability starts, the insurant demands the termination of the contract, the insurer may collect the insurance premiums due for the period from the date when the insured liability starts to the date of the termination of the contract, with the remaining returned to the insurant.
Article 40 The insured value of the objects insured shall be agreed upon between the insurant and the insurer and specified in the contract or determined according to the actual value of the objects of insurance at the time when the insured risks occur.
The insured amount shall not exceed the insured value. If it exceeds the insured value, the part in excess shall be invalid.
If the insured amount is less than the insured value, except otherwise provided for, the insurer shall undertake to compensation according to the proportion between the insured amount and the insured value.
Article 41 The insurant of double insurance shall notify all the insurers of the double insurance.
If the insured amount of double insurance exceeds the insured value, the total amount of compensation made by all insurers shall not exceed the insured value. Except otherwise provided for in the contract, each insurer shall undertake to compensation according to the proportion of its insured amount in the total insured amount.
Double insurance refers to insurance contracts signed by an insurant with more than two insurers for the same objects of insurance, the same insurable interest and the same insured risks.
Article 42 When an insured risk occurs, the insured shall be obliged to adopt all necessary measures to prevent or mitigate losses.
After an insured risk occurs, all the necessary and reasonable cost paid by the insured to prevent or mitigate the losses of the objects insured shall be covered by the insurer. The amount undertaken by the insurer shall be calculated separately from the compensation for the losses of the objects insured, with the maximum amount not exceeding the insured amount.
Article 43 If part of the objects insured sustains losses, the insurant may terminate the contract within 30 days after the insurer pays the indemnities. Except otherwise provided for, the insurer may also terminate the contract. In the case in which the insurer terminates the contract, the insurer shall notify the insured 15 days in advance and return the premiums on the part not sustaining losses to the insured after deducting the part receivable from the date when the insured liability starts to the date when the contract is terminated.
Article 44 If, after an insured risk occurs, the insurer has paid up all the insured amount and the insured amount is equal to the insured value, all the rights of the objects insured sustaining losses shall be in the possession of the insurer. If the insured amount is less than the insured value, the insurer shall retain part of the rights according to the proportion between the insured amount and the insured value.
Article 45 If an insured risk occurs due to the damage of the objects insured by a third party, the insurer shall, starting from the date of paying the indemnities, subrogate the insured to exercise the right to indemnities from the liable third party.
If, after the insured risk occurs as provided for in the preceding paragraph, the insured has already obtained indemnities from the third party, the insurers may pay the indemnities in the amount after the indemnities paid by the third party to the insured are deducted.
The subrogation of the insurer to exercise the right to claim for indemnities according to the provisions of the first paragraph of this article shall not affect the right of the insured to claim for indemnity from the third party on the part not compensated for.
Article 46 If, after an insured risk occurs, the insured has forfeited the right to claim for indemnities from the third party before the insurer pays the insurance money, the insurer shall not undertake to indemnities.
If, after the insurer has paid indemnities to the insured, the insured forfeits the right to indemnities from the third party, without the insurer's consent, the act is invalid.
If, due to the fault of the insured, the insurer cannot subrogate the insured to exercise the right to claim for indemnities, the insurer shall reduce the payment of insurance money correspondingly.
Article 47 Except the family members or other members of the insured deliberately cause the insured risk to occur as provided for in the first paragraph of Article 44 of this law, the insurer shall not subrogate the family members or other members of the insured to exercise the right to indemnity claims.
Article 48 When the insurer exercises the right of subrogation to indemnity claims, the insured shall provide the insurer with necessary documents and the related information in its knowledge.
Article 49 The necessary and reasonable expenses paid by the insurer and the insured for investigating and establishing the nature and the causes of the insured risks and the losses of the objects of insurance shall be covered by the insurer.
Article 50 The insurer shall, according to the provisions of law or the agreement in the contract, directly pay insurance money to the third party if damages are caused by the insured covered by the liability insurance.
Liability insurance refers to insurance that makes the liability to indemnities of the insured to the third party as the object.
Article 51 If the insured risk that has caused harm to the third party due to the insured is brought for arbitration or before the court, the necessary and reasonable expenses as arbitration fees or the litigation expenses paid by the insured shall be covered by the insurer.

Section 3 Life Insurance Contract
Article 52 A life insurance contract is an insurance contract that takes the life and body of persons as the objects of insurance.
The life insurance contract is called "contract" for short except otherwise specified.
Article 53 An insurant shall have the insurable interest for the following people:
1. The insurant himself;
2. Spouse, children and parents;
3. Other members of the family or blood relatives other than those specified in the preceding paragraph for whom the insurant has or shares the obligations of support.
Except the provisions of the preceding paragraph, if the insured agrees to let the insurant to sign the contract for him, the case shall be regarded as the insurant having insurable interest in the insured.
Article 54 If the age of the insured stated by the insurant is not true and the true age does not conform to the age limit agreed in the contract, the insurer may void the contract and return the insurance premium after deducting the commissions, except when the time has exceeded two years starting from the date of the conclusion of the contract.
If the insurance premium paid by the insurant is less than what is payable due to the misstatement of age on the part of the insurant, the insurer has the right to correct and demand retroactive payment of premiums from the insured or pay the insurance money according to the proportion of the premiums actually paid and the premiums payable.
If the insurance premium paid by the insurant is more than what is payable due to the misstatement of age on the part of the insurant, the insurer shall return the premiums in excess of the due amount.
Article 55 The insurant is not allowed to take out the whole life policies for people incapable of civil acts; neither shall the insurer underwrite such policies.
But the cases in which parents take out life insurance policies for their children not coming of age are not limited by the preceding provisions. But the lump sum settlement upon the death of the insured shall not exceed the limit set by the insurance supervision and administration department.
Article 56 A contract that makes death as the conditions for payment of proceeds shall be invalid without the written approval of the insured for the contract and the insured amount.
The insurance policies issued according to the contract that makes death as the conditions for payment of proceeds shall not be transferred or used as mortgage without the written approval of the insured.
But the life insurance taken by parents for their children not coming of age is not limited by the provisions in the first paragraph of this article.
Article 57 After a contract comes into effect, the insurant may pay the insurance premium by a lump sum or by installments as agreed upon in the contract.
If a contract provides for the payment of premium in installments, the insurant shall pay the first payment of premiums at the time when the contract is signed and pay the rest according to the time limit set in the contract.
Article 58 After the insurant pays the first payment of premiums according to contract that provides for premium payment in installments, but the insurant fails to pay the premium of the period within 60 days of the prescribed period, the contract shall become void or the insurer shall reduce the insured amount according to the conditions provided for in the contract.
Article 59 In the case of the void of the contract as provided for in the preceding article, the effect of the contract may be restored after the insurer and the insured reach agreement through consultation and the insurant pays the premium retroactively. However, in the case when the two sides fail to reach agreement within two years after the termination of the contract, the insurer has the right to terminate the contract.
If the contract is terminated as provided for in the preceding paragraph, the insurer shall return the cash value of the insurance policies as agreed upon in the contract if the insurant has paid up insurance premium for more than two full years. If the insurant has not paid up the premium for two years, the insurer shall return the premium paid after deducting the commissions.
Article 60 The insurer shall not demand payment of premiums for life insurance by taking legal actions.
Article 61 The beneficiaries of life insurance shall be designated by the insured or the insurant.
In appointing beneficiaries, the insurant shall get the approval of the insured.
If the insured is a person incapable of civil acts or whose capability of civil acts is restricted, the guardian shall appoint the beneficiaries.
Article 62 The insured or the insurant may appoint one or several persons as beneficiaries.
In the case of several beneficiaries, the insured or the insurant may determine the order and shares of the benefit among them. If the share of benefit is not determined, the beneficiaries shall share the benefit equally.
Article 63 The insured or the insurant may change the beneficiaries and notify the insurer in writing.
The insurer shall take notes on the insurance policies after receiving the written notice on the change of the beneficiaries. In changing the beneficiaries, the insurant shall get the consent of the insured.
Article 64 After the death of the insured, the insurance money shall be treated as the legacy of the insured and the insurant shall perform the obligation of paying the insurance money to the inheritors of the insured if any of the following cases occurs:
1. Beneficiaries are not appointed;
2. The beneficiaries die before the insured and there are no other appointed beneficiaries;
3. The beneficiaries lose the right to the insurance benefit according to law or forfeit the right to benefit and there are no other beneficiaries.
Article 65 If the insurant or the beneficiaries deliberately cause the death, injury or sickness of the insured, the insurer shall not undertake to pay the insurance money.
If the insurant has paid up insurance premiums for more than two full years, the insurer shall, according to the provisions of the contract, return the cash value of the policies to the other beneficiaries enjoying the right to benefit. If a beneficiary deliberately causes the death or injury of the insured or deliberately and unsuccessfully murders the insured, the beneficiary shall lose the right to the benefit.
Article 66 If the insured to the contract that takes the death of the insured as the condition of payment commits suicide, the insurer shall not undertake to pay the insurance, except the cases provided for in the second paragraph of this article, but the insurer shall return the insurance premiums paid by the insurant according to the cash value of the policy.
If the insured commits suicide two years after the contract that takes death as the condition of payment is signed, the insurer shall pay the insurance according to contract.
Article 67 If the insured deliberately commits crimes that lead to its own injury or death, the insurer shall not undertake to insurance payment. If the insurance premium has been paid for more than two full years, the insurer may return the cash value according to the policy.
Article 68 If a person covered by life insurance dies, is injured or sick due to the acts of any third party, the insurer shall not be entitled to recover from the third party after paying insurance to the insured or beneficiaries. But the insured or the beneficiaries shall have the right to claim compensation against the third party.
Article 69 If a contract is terminated by the insurant, who has paid up premiums for more than two full years, the insurer shall return the cash value of the policies within 30 days starting from the date of receiving the notice of contract termination. If the premium has been paid for less than two full years, the insurer shall return the premium after deducting the commissions according to the provisions of the contract.

Chapter III Insurance Company

Article 70 Insurance companies shall adopt the following organizational forms:
1. Joint stock company;
2. Wholly state-owned company.
Article 71 The opening of an insurance company shall get the approval of the insurance supervision and administration department.
Article 72 The opening of an insurance company shall meet the following requirements:
1. It shall have articles of association as provided for by this law and the company law;
2. It shall have the minimum registered capital provided for in this law;
3. It shall have senior management staff with professional knowledge and work experience;
4. It shall have a sound organizational setup and management system;
5. It shall have offices and other related facilities that are up to the requirements.
In examining and approving the applications for setting up insurance companies, the insurance supervision and administration department shall take into consideration the need of the development of the insurance business and fair competition.
Article 73 The minimum amount of registered capital for an insurance company shall be RMB200 million.
The minimum amount of registered capital shall be the paid in money capital.
Insurance supervision and administration department may adjust the minimum amount of registered capital in the light of the business lines of an insurance company and its operational scale. But the amount shall not be less than the limit set in the first paragraph of this article.
Article 74 In applying for the establishment of an insurance company, the following documents and materials shall be submitted:
1. An application, which should specify the name, registered capital and business line of the insurance company to be set up;
2. Feasibility study report;
3. Other documents and materials required by the insurance supervision and administration department.
Article 75 An applicant may start preparations for the establishment of the insurance company according to the provisions of this law and the company law after the application passes the preliminary examination. If it has the conditions of establishment as provided for in Article 71 of this law, an official application shall be filed with the insurance supervision and administration department, together with the following documents and materials:
1. Articles of association of the insurance company;
2. List of shareholders and their shares or investment contributors and the amount of investment each contributes;
3. Certificates of credit rating and related materials for shareholders who hold over 10 percent of the shares of the company;
4. Certificate for capital verification produced by the registered capital verification organizations;
5. Resumes and qualification certificates of senior management personnel to be appointed;
6. Operational principles and plans;
7. Materials about the operational sites and other facilities associated with the business operations; and
8. Other documents and materials as required by the insurance supervision and administration department.
Article 76 Insurance supervision and administration department shall take the decision of approval or disapproval within six months starting from the date of reception of the official applications for establishment of insurance companies.
Article 77 If the establishment of an insurance company is approved, the department of approval shall issue the permit for insurance operation, and the insurance company shall, on the strength of the operational permit, go through the registration procedures with the administrations for industry and commerce and draw the business license.
Article 78 If an insurance company fails to go through the registration procedures without justifiable reasons within six months starting from the date of the acquisition of the insurance operational permit, the permit shall cease to be valid automatically.
Article 79 After the establishment of an insurance company, it shall draw 20 percent of the registered capital as the guaranty funds and deposit them in the banks designated by the insurance supervision and administration department. The deposits shall not be used unless for liquidation purposes.
Article 80 In opening subsidiaries within the territory of the People's Republic of China, an insurance company shall get the approval from the insurance supervision and administration department and obtain insurance business permits for the subsidiaries.
The subsidiaries of an insurance company do not enjoy the status of legal persons, whose civil liabilities shall be borne by the head office.
Article 81 In opening representative offices within the territory of the People's Republic of China , an insurance company shall get the approval from the insurance supervision and administration department.
Article 82 An insurance company shall get the approval of the insurance supervision and administration department in one of the following alterations:
1. Change in name;
2. Change in registered capital;
3. Changes in the operational sites of the head office or its subsidiaries;
4. Changes in the line of business;
5. Separation or consolidation of the company;
6. Revision of the articles of association;
7. Changes in the investment contributors or the shareholders who hold at least 10 percent of the shares of the company; and
8. Other changes as provided for by insurance supervision and administration department.
In replacing board chairman and general manager, an insurance company shall submit it to the insurance supervision and administration department for examining the qualifications.
Article 83 The provisions of the Company Law shall apply with regard to the organizational setup of an insurance company.
Article 84 A wholly state-owned insurance company shall set up a board of supervisors which shall be made up of representatives from the insurance supervision and administration department, related experts and selected staff members of the insurance company. The board shall exercise supervision over the various reserve funds drawn by the company, the minimum ability of payment and the maintenance and increment of the values of state assets and the acts of senior management personnel in observing the laws, administrative degrees or regulations and the acts harmful to the interests of the company.
Article 85 In the cases of separation, consolidation or the occurrence of the causes for dissolution according to the articles of association, an insurance company shall be dissolved with the approval of the insurance supervision and administration department. The company shall set up a liquidation group according to law to conduct liquidation.
Insurance companies operating life insurance businesses are not allowed to be dissolved apart from separation or consolidation.
Article 86 If an insurance company has its insurance operational permit revoked by insurance supervision and administration department due to violations of law or administrative decrees, the insurance company shall be cancelled according to law. The insurance supervision and administration department shall undertake to form a liquidation group to carry out liquidation according to law.
Article 87 If an insurance company becomes insolvent, it shall be declared bankrupt by the People's Courts and with the approval of the insurance supervision and administration department. If an insurance company is declared bankrupt, the liquidation group shall be organized by the people's courts, insurance supervision and administration department and related personnel to carry out liquidation according to law.
Article 88 If an insurance company with life insurance operations is cancelled or declared bankrupt according to law, the life insurance contracts and reserve funds it holds shall be transferred to another insurance company undertaking life insurance. If the company fails to reach transfer agreement with another life insurance company, the insurance supervision and administration department shall designate a life insurance company to accept the business.
Where any life insurance contract or reserve fund as provided for in the preceding paragraph is transferred or accepted upon the designation of the insurance supervision and administration department, the legitimate rights and interests of the insured and beneficiaries shall be retained.
Article 89 In the case when an insurance company is declared bankrupt, the property shall be liquidated according to the following order after giving priority to paying for the bankrupt expenses:
1. To pay the wages of the workers and labor insurance expenses;
2. To pay indemnities or insurance money;
3. To pay taxes in arrears; and
4. To pay debt owed by the company.
If the property is not enough for payment for items in the same order, it shall be paid out proportionately.
Article 90 If an insurance company terminates its business operations according to law, it shall cancel its insurance operational permit.
Article 91 The Company Law and other related laws and administrative decrees and regulations shall apply to items about the establishment, alteration, dissolution and liquidation of an insurance company that have not been provided for in this law.

Chapter IV Insurance Operational Rules

Article 92 The business scope of an insurance company:
1. Property insurance, including property loss insurance, liability insurance and credit insurance;
2. Personal insurance, including life insurance, health insurance and accidental injury insurance.
No insurer is allowed to engage in property insurance and life insurance concurrently; however, an insurance company undertaking property insurance business may undertake short-term health insurance and accidental injury insurance businesses upon verification of the insurance supervision and administration department.
The business scope of an insurance company shall be verified by the insurance supervision and administration department. An insurance company shall operate within the business scope verified.
An insurance company may not concurrently operate any businesses other than those specified in this Law and other laws and administrative regulations.
Article 93 With the approval of the insurance supervision and administration department, an insurance company may undertake the following re-insurance businesses of the insurance operations provided for in the preceding article:
1. Outward re-insurance;
2. Inward re-insurance.
Article 94 An insurance company shall draw various kinds of liability reserve funds in accordance with the principles of safeguarding the interests of the insured, and guaranteeing the payment capacity.
The specific measures for drawing and carrying down liability reserve funds by insurance companies shall be formulated by the insurance supervision and administration department.
Article 95 An insurance company shall, according to the insurance indemnities or payment claimed and the insurance indemnities or payment not yet claimed after the insured contingencies occur, draw reserve for outstanding losses.
Article 96 Apart from drawing reserves according to the provisions of the preceding two articles, an insurance company shall draw public accumulation funds according to the provisions of relevant laws, administrative decrees or regulations and the requirements of the state financial and accounting system.
Article 97 In order to protect the interests of the insured and support the steady and safe operations of insurance companies, an insurance company shall draw insurance guaranty fund according to the provisions by the insurance supervision and administration department.
The insurance guaranty fund shall be managed in a concentrated way and be used in a planned way.
The specific measures for management and use of the insurance guaranty fund shall be formulated by the insurance supervision and administration department.
Article 98 An insurance company shall have the minimum payment ability compatible with its size of business operations. The difference of the actual assets subtracting actual liabilities shall not be less than the amount stipulated by the insurance supervision and administration department. If the amount is less than the prescribed amount, capital funds shall be increased to make up for the deficit.
Article 99 The year's premiums retained by an insurance company undertaking property insurance shall not exceed four times that the total of the actual capital fund plus public accumulation fund.
Article 100 The liability undertaken by an insurance company for a risk unit, namely, the maximum loss caused by one insured risk, shall not exceed 10 percent of the total of the actual capital fund plus public accumulation fund. The part in excess of the amount shall be re-insured.
Article 101 The risk unit rating method and plan against huge risks of an insurance company shall be examined and approved by the insurance supervision and administration department.
Article 102 An insurance company shall make re-insurance according to the relevant regulations of the insurance supervision and administration department.
Article 103 An insurance company shall make re-insurance with insurance companies within the territory of the People's Republic of China by priority.
Article 104 Insurance supervision and administration department have the right to restrict or ban insurance companies from re-insuring out to insurance companies outside the territory of the People's Republic of China or accepting inward re-insurance business from outside the territory of the People's Republic of China.
Article 105 The operation of funds of an insurance company shall be steady and safe according to the principle of safety and ensure the property to maintain or increase its value.
The operation of funds of an insurance company is confined to bank deposits, purchasing of government bonds, financial bonds and other way of fund operation provided for by the State Council.
No insurance company may use its funds to set up any security operation organization or enterprise irrelevant to insurance.
The proportion of the fund operated by an insurance company or the funds for specific projects in the total amount of funds shall be provided for by the insurance supervision and administration department.
Article 106 An insurance company and its staff members are not allowed to commit the following acts:
1. To deceive insurants, the insured or beneficiaries;
2. To conceal important information associated with insurance contracts;
3. To obstruct the insured from performing the obligation of making faithful representations according to the provisions of this law or induce the insured not to perform the obligations of making faithful representations provided for by this law. 4. To promise rebates or other interests other than those provided for in the contracts to the insurant, the insured or beneficiaries. 5. To deliberately fabricate insurance risks that have never occurred to make false indemnities and cheat for insurance money.

Chapter V Supervision and Administration of the Insurance Business

Article 107 The basic insurance clauses and insurance rates for the categories of insurance that concern public interest or the compulsory or newly developed categories of life insurance shall be submitted to insurance supervision and administration department for examination and approval. The insurance supervision and administration department shall abide by the principles of protection of public interest and prevention of unfair competition in the examination and approval. The scope of and specific measures for examination and approval shall be formulated by the insurance supervision and administration department.
The insurance clauses and insurance rates of other categories of insurance shall be submitted to insurance supervision and administration department for record.
Article 108 Insurance supervision and administration departments shall establish and perfect the regulatory index system for payment capacity to monitor the minimum payment capacity of insurance companies.
Article 109 An Insurance supervision and administration department shall have the right to check the operations, financial situation and operation of funds of insurance companies and have the right to demand for the supply of related written reports and materials within the prescribed time limit.
Insurance companies shall be subject to the supervision and check pursuant to law.
An insurance supervision and administration department shall have the right to check the deposits of insurance companies in financial institutions.
Article 110 If an insurance company fails to draw or carry down various reserves or fails to make re-insurance as provided for by this law or seriously violates the provisions of this law about fund operation, insurance supervision and administration department shall order the insurance company to adopt the following measures to correct within a prescribed time limit:
1. To draw or carry down various reserves according to law;
2. To handle re-insurance according to law;
3. To correct the acts of law-violating fund operation;
4. To re-appoint leading members and related managing personnel.
Article 111 If insurance supervision and administration department have taken the decision demanding correction within a prescribed time limit according to the provisions of the preceding article and the insurance company has failed to correct within the prescribed time limit, the insurance supervision and administration department shall decide to send professional personnel or designate related personnel of the insurance company to form an organization to carry out overhaul of the insurance company.
The overhaul decision shall specify the name of the insurance company to be overhauled, causes for overhaul, overhaul organization and time limit for the overhaul and make an announcement.
Article 112 In the course of the overhaul, the overhaul organization has the right to supervise over the routine operations of the insurance company. The responsible members and related managing personnel of the insurance company shall perform their functions under the supervision of the overhaul organization.
Article 113 The original business operations shall continue while the company is being overhauled. But the insurance supervision and administration department have the right to stop it from underwriting new policies or suspend part of its original operations and adjust the operation of funds.
Article 114 If an insurance company subject to overhaul has corrected its law-violating acts and restored its normal operation, the overhaul organization shall file a report to the insurance supervision and administration department for approval before the overhaul is declared ended.
Article 115 If an insurance company has violated the provisions of this law and jeopardized the public interests and will possibly seriously threaten or has already threatened the payment ability of the company, the insurance supervision and administration department may take over the insurance company.
The purpose of the taking over is to adopt necessary measures against the insurance company taken over in order to protect the interests of the insured, restore the normal operation of the insurance company. The debts and liabilities of the company shall not change due to the take- over.
Article 116 The composition of the take-over organization and methods shall be determined by the insurance supervision and administration department, which shall make an announcement.
Article 117 Upon the expiry of the take-over period, the insurance supervision and administration department may decide to extend the period, but the maximum term of the take-over period shall not exceed two years.
Article 118 Upon the expiry of the take-over period, if the insurance company taken over has restored its ability of normal operation, the insurance supervision and administration department may decide to terminate the take-over.
If the take-over organization deems the property of the insurance company taken over not enough to clear all its debts, it may, with the approval of the insurance supervision and administration department, apply with the people's court for declaring the insurance company bankrupt.
Article 119 An insurance company shall, within three months after the end of each accounting year, submit the operations report, financial and accounting report and related statements to the insurance supervision and administration department and make an announcement according to law.
Article 120 An insurance company shall, at the end of each month, submit the operational statistics of the preceding month to the insurance supervision and administration department.
Article 121 The actuaries to be employed by an insurance company shall have been acknowledged by the insurance supervision and administration department and the insurance companies shall establish an actuarial report system.
Article 122 The business reports, accounting reports, actuarial reports and other related statements, documents and materials must faithfully record the insurance operations, and may not contain any false records, misleading statements or major omissions.
Article 123 An insurer or the insured may retain independent appraisal organizations or experts with legal qualifications to carry out appraisal and evaluation of the insured risks.
The appraisal organizations or experts legally retained to make appraisal and evaluation of the insured risks shall do so impartially pursuant to law. Those causing damages to the insurer or insured deliberately or by neglect shall be liable for compensation pursuant to law.
The appraisal organizations or experts legally retained to make appraisal and evaluation of the insured risks shall follow the laws and administrative regulations with respect to taking charges.
Article 124 An insurance company shall keep properly all the books about its business operations, original vouchers and related materials.
The books, original vouchers and related materials provided for in the preceding paragraph shall be kept for at least ten years starting from the date of the termination of insurance contracts.

Chapter VI Insurance Agents and Insurance Brokers

Article 125 An insurance agent is an entity or individual who, entrusted by the insurer, collects commissions from the insurer and, on behalf of the insurer, handles insurance business within the scope authorized by the insurer.
Article 126 An insurance broker is an entity which, for the sake of the interests of the insurant, provide intermediary services in signing insurance contracts on behalf of the insurant with the insurer and collect commissions according to law.
Article 127 In entrusting an insurance agent to handle the insurance business, an insurer shall sign an agent agreement with the insurance agent to agree upon the rights and obligations as well as other agent matters pursuant to law.
Article 128 An insurance company shall be responsible for the acts of an insurance agent to handle insurance business as authorized by the insurer.
If an insurance agent conducts any acts beyond the authorized scope in handling insurance business for the insurer, and the insurant is justified to believe that it is authorized and has signed the insurance contract, the insurer shall bear the insurance liabilities; however, the insurer may claim damages against the insurance agent ultra vires pursuant to law.
Article 129 In the handling of life insurance business, an individual insurance agent is not allowed to accept the trust of more than two insurers at the same time.
Article 130 If losses have been incurred on the insured due to the fault of an insurance broker, the insurance broker shall be liable to compensation.
Article 131 In handling insurance business, insurance agents and insurance brokers are not allowed to conduct any of the following acts:
1. To deceive the insurer, insurant, insured or beneficiary;
2. To conceal any important information about the insurance contract;
3. To frustrate the insurant from performing the obligation of faithful statement provided for in this Law, or to induce it not to perform such obligation;
4. To promise the insurant, insured or beneficiary of any interest other than those stipulated in the insurance contract;
5. To use their administrative power, position or the advantage of their profession or any other illicit means to force, induce or restrict the insured to sign insurance contracts.
Article 132 An insurance agent and an insurance broker shall acquire the qualifications provided for by insurance supervision and administration department and obtain the insurance agency business permit of insurance brokerage permit from the insurance supervision and administration department and go through the registration procedures with the administrations for industry and commerce, obtain business licenses and pay the guaranty money or take out professional liability insurance policies.
Article 133 An insurance agent and an insurance broker shall have their own operational sites, special books to record the receipts and expenditures of their agency operations or brokerage operations, and accept the supervision by the insurance supervision and administration department.
Article 134 Insurance agency commissions and broker commissions may only be paid to the insurance agents and insurance brokers with legal qualifications, and may not be paid to others.
Article 135 An insurance company shall set up a record of its own insurance agents.
Article 136 An insurance company shall strengthen the training and management of the insurance agents, enhance the professional ethics and quality of the insurance agents, and may not abet or mislead the insurance agents to do any activities against the obligation of good faith.
Article 137 The provisions of Article 109 and Article 119 of this Law shall apply to insurance agents and insurance brokers.

Chapter VII Legal Liability

Article 138 Where any insurant, insured or beneficiary commits any of the following acts for the purpose of deception and if the cases are serious enough to constitute a crime, he shall be subject to criminal liabilities:
1. The insurant deliberately fabricates the objects of insurance to deceive into getting insurance money;
2. To defraud the insurer of insurance money by falsifying the occurrence of insured risks that have not actually happened;
3. To defraud the insurer of insurance money by deliberately causing the occurrence of insured risks that have caused property losses.
4. To defraud the insurer of insurance money by deliberately causing the death, injury or sickness of the insured and other contingencies.
5. To defraud the insurer of insurance money by forging or altering certificates, materials and other evidence associated with insured contingencies or by instigating, inducing or buying over others to provide false evidence, materials or other evidence, or by fabricating the causes of contingencies or exaggerating losses.
If the case involving one of the acts listed in the preceding paragraph is not serious enough to constitute a crime, administrative punishments shall be meted out according to relevant state regulations.
Article 139 If an insurance company or any of its staff members conceals any important information about the insurance contract to deceive the insured or beneficiaries or refuses to perform the liabilities of indemnity or insurance payment as agreed upon in the contract and if the cases are serious enough to constitute a crime, the offender shall be subject to criminal liabilities. If the cases are not serious enough to constitute a crime, the insurance supervision and administrative departments shall impose a fine of more than RMB 50,000 and less than RMB 300,000 on the insurance company concerned; and impose a fine of more than RMB 20,000 but less than RMB 100,000 on the staff members who have violated the law; if the case is serious, the insurance company's business scope shall be restricted or the insurance company shall be ordered to accept new businesses.
If an insurance company or any of its staff members obstructs the insurant from performing its obligation of making true representations or promises any insurant, insured or beneficiary of illegal insurance premium rebates or other interests, and if the case is serious enough to constitute a crime, the offender shall be subject to criminal liabilities pursuant to law; if the case is not serious enough to constitute a crime, the insurance supervision and administration department shall order them to get right and impose a fine ranging from RMB 50,000 to RMB 300,000 on the insurance company concerned; the staff members who have violated the law shall imposed on a fine ranging from RMB 20,000 to RMB 100,000; if the case is serious, the insurance company's business scope shall be restricted or the insurance company shall be ordered to accept new businesses.
Article 140 If an insurance agent or insurance broker is found to have deceived any insurer, insurant, insured or beneficiaries, and if any crime is constituted, he shall be subject to criminal responsibilities pursuant to law; if the case is not serious enough to constitute a crime, the insurance supervision and administration department shall order the agent or broker to correct, concurrently with a fine ranging from more RMB 50,000 to RMB 300,000; if the case is serious enough, the insurance agency business permit or the insurance brokerage business permit shall be revoked.
Article 141 If any insurance company or its staff members is found to have fabricated the occurrence of insured risks to settle claims so as to gain by fraud any insurance money, and if the case is serious enough to constitute a crime, the offender shall be subject to criminal responsibilities pursuant to law.
Article 142 Those who establish insurance companies or engage in commercial insurance activities without authorization in violation of this Law shall be stopped by the insurance supervision and administration department; if a crime is constituted, the offender shall be subject to criminal liabilities pursuant to law; if the case is not serious to constitute a crime, the insurance supervision and administration department shall confiscate the illegal gains, and impose a fine ranging from 1 time to 5 times of the illegal gains, if there are no illegal gains or the illegal gains are less than RMB 200,000, a fine ranging from RMB 200,000 to RMB 1,000,000 shall be imposed.
Article 143 If an insurance company, in violation of this Law, operates beyond the business scope approved or concurrently operates any business other than those provided for by this Law or any other law and administrative regulation, the offender shall be subject to criminal liabilities pursuant to law if a crime is constituted; if the case is not serious enough to constitute a crime, the insurance supervision and administration department shall order it to correct, and to return the premiums collected, confiscate the illegal proceeds and impose a fine ranging from one time to five times the illegal proceeds; if there are no illegal proceeds or the illegal proceeds are less than RMB 100,000, a fine ranging from RMB 100,000 to RMB 500,000 shall be imposed; if the acts are not corrected within the prescribed time limit or have caused serious consequences, the insurance company shall be ordered to suspend operation for overhaul or its insurance business permit shall be revoked.
Article 144 If an insurance company is found to have changed the name, articles of association, registered capital or the operational sites of the company or its subsidiaries without approval and in violation of this Law, the insurance supervision and administration department shall order it to correct and impose a fine ranging from RMB 10,000 to RMB 100,000.
Article 145 If any of the following acts is committed in violation of the provisions of this law, the insurance supervision and administration department shall order the law violators to correct and concurrently impose a fine ranging from RMB 50,000 to RMB 300,000; if the case is serious, the business scope may be limited or handling of new operations shall be suspended or even the insurance operation permit shall be revoked:
1. To fail to draw and deposit guaranty funds or use guaranty funds in violation of the regulations;
2. To fail to draw or carry down various kinds of liability reserves or fail to draw reserve for outstanding losses according to the provisions of this law.
3. To fail to draw insurance guarantee fund or public accumulation funds;
4. To fail to handle re-insurance according to regulations;
5. To operate the funds of an insurance company in violation of related provisions;
6. To set up subsidiaries or representative offices without approval;
7. To separate or consolidate without approval.
8. To fail to submit the insurance clauses or rates of the categories of insurance that shall be submitted for examination and approval pursuant to law.
Article 146 If any of the following acts is committed in violation of the provisions of this Law, the insurance supervision and administration department shall order correction, and for failure in the correction within the prescribed time limit, a fine ranging from RMB 10,000 to RMB 100,000 shall be imposed.
1. To fail to submit relevant reports, statements, documents and materials according to related provision;
2. To fail to submit for the record the insurance clauses or rates of the categories of insurance that shall be submitted for record according to related provisions.
Article 147 If any of the following acts is committed in violation of the provisions of this law, the offender shall be subject to criminal liabilities pursuant to law if a crime is constituted; if the case is not serious enough to constitute a crime, the insurance supervision and administration department shall order the violator to correct and impose on a fine ranging from RMB 100,000 to RMB 500,000; if the case is serious, the business scope may be limited or handling of new operations shall be suspended or even the insurance operation permit shall be revoked:
1. To provide false reports, statements, documents or materials;
2. To refuse or obstruct the checks and supervision according to law.
Article 148 If any of the following acts is committed in violation of the provision of this law, the insurance supervision and administration department shall order correction and impose a fine ranging from RMB 50,000 to RMB 300,000:
1. Serious cases of over-insurance;
2. To underwrite insurance policies with death as the conditions for payment for people incapable of civil acts.
Article 149 Those who violate the provisions of this Law by illegally engaging in the insurance agency business or brokerage business without getting the insurance agency business permit or brokerage permit, the insurance supervision and administration department shall stop them; the offender shall be subject to criminal liabilities pursuant to law if a crime is constituted; if the case is not serious enough to constitute a crime, the insurance supervision and administration department shall confiscate their illegal proceeds and concurrently impose a fine more than one time and less than five times the illegal proceeds. If there are no illegal proceeds or the illegal proceeds are less than RMB 100,000, a fine ranging from RMB 100,000 to RMB 500,000 shall be imposed.
Article 150 Insurance supervision and administration department shall, regarding the different situations, give such punishments as a warning or replacement and the concurrent imposition of a fine ranging from RMB 20,000 and to RMB 100,000 to the senior management personnel or other people directly responsible for an act that violates the provisions of this Law and is not serious enough to constitute a crime.
Article 151 For an act that violates any provisions of this Law and has caused damages to others, the violators shall undertake the civil responsibility.
Article 152 For those who are found to have approved the application for the establishment of an insurance company not up to the required standards or approved an insurance agent or broker not up to the requirements, or those who abuse their power or neglect their duties, if the cases are serious enough to constitute a crime, the offender shall be subject to criminal liabilities pursuant to law; or administrative sanctions shall be given if the cases are not serious enough to constitute a crime.

Chapter VIII Supplementary Provisions

Article 153 For marine insurance the relevant provisions of the commercial maritime law shall be abided by. This law shall apply to matters not covered by the commercial maritime law. Article 154 The provisions of this law are applicable to Chinese-foreign joint equity insurance companies, solely foreign-funded insurance companies and branches of foreign insurance companies; if there are separate provisions by other laws or administrative regulations, those laws and regulations shall apply. Article 155 The state supports the development of insurance businesses in the service of agricultural production. Regulations on agricultural insurance shall be provided for by other laws and administrative regulations. Article 156 There shall be separate provisions of laws or administrative regulations concerning insurance organizations other than those provided for in this law. Article 157 The insurance companies approved before the law is promulgated shall continue to operate and those not up to the requirements provided by this law shall strive to measure up to the requirements within a prescribed time limit. Specific procedures shall be formulated separately by the State Council. Article 158 The law shall enter into force as of October 1, 1995. Promulgated by The Standing Committee of the National People's Congress on 2002-10-28

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