Since its promulgation in 1995, the Insurance Law of China has played an important role in the development of the insurance industry. Over the years, however, significant changes have taken place inside and outside of the insurance industry. In terms of the external environment, the reform of the financial system has been deepened and the role of market mechanisms has been strengthened. In particular, since its accession to the WTO, China has further stepped up its opening to the outside world and its compliance with international practice. In terms of the internal structure, the size of the market has increased greatly, and the scale of business has grown quickly, with the variety of insurance products becoming ever larger. The number of insurance companies has increased from 9 six years ago to 52 in 2001. The annual premium income has increased from over 68 billion RMB six years ago to 210 billion RMB in 2001. The swift growth of new types of insurance products has set a higher demand on the use of insurance funds. At the same time, the process of allowing the market to determine rate levels has accelerated, the standard of insurance company management is constantly improving and industry self-regulatory organizations have gradually been brought into play. Since the establishment of the China Insurance Regulatory Commission, supervision of the insurance industry has clearly been strengthened. These changes have caused some of the shortcomings of the Insurance Law to become gradually apparent. For example, there are inconsistencies between individual provisions and China's commitments in connection with its accession to the WTO. Some provisions are no longer appropriate to the strengthening of insurance supervision and administration. That's why the Standing Committee of the People's Congress of China decided to amend it in October, 2002.
