(Effective on July 25, 1996)
Contents
Chapter I General Provisions
Chapter II Establishment, Change and Termination of Insurance Organizations
Chapter III Business Scope of Insurance Companies
Chapter IV Control and Use of Funds for Insurance
Chapter V Control of License
Chapter VI Control of Insurance Clauses and Premium Rates
Chapter VII Control of Indemnity and Payment Ability of Insurance Companies
Chapter VIII Control of Insurance Business Activities
Chapter IX Supervisory Control
Chapter X Penalty Provisions
Chapter XI Supplementary Provisions
Chapter I General Provisions
Article 1
For the purposes of strengthening the supervision and control over the insurance industry and promoting its healthy development and pursuant to the Insurance Law of the People's Republic of China (hereinafter referred to as the "Insurance Law"), these Regulations are hereby enacted.
Article 2
The People's Bank of China is the financial supervision and control authority of the State, which shall, under the leadership of the State Council and in accordance with law, perform the following duties in supervising and controlling the insurance:
1. examining and approving and controlling the establishment, change and termination of insurance organizations;
2. creating and modifying insurance clauses and premium rates for major types of insurance;
3. supervising, administering, inspecting and auditing the insurance industry; outlawing, investigating into and punishing any insurance organizations established without approval or any illegal or convert acts of insurance businesses.
Insurance companies shall, in carrying on insurance businesses according to law, be free from any interference by local governments, governmental departments at various levels, social groups or persons.
Article 3
"Insurance companies" as the term is used in these Regulations means property insurance companies, life insurance companies, reinsurance companies as well as other insurance companies, which are established with approval of the People's Bank of China and are registered according to law.
"Branches of insurance companies" as the term is used in these Regulations means the branch companies, sub-branch companies, business offices, business departments and representative offices of insurance companies. Unless the State stipulates otherwise, no branch of insurance companies may take any other organizational form.
"Insurance organizations" as the term is used in these Regulations means insurance companies and their branches as well as other organizations approved by the People's Bank of China to engage in insurance business activities.
Chapter II Establishment, Change and Termination of Insurance Organizations
Article 4
The establishment of an insurance company shall comply with the following principles:
1. meeting the needs of national economic development;
2. separation of operations of property insurance and life insurance;
3. the rational arrangement and fair competition; and
4. particular about the economic effects.
Article 5
In applying to establish an insurance company or its branch, the following requirements must be satisfied:
1. For setting up an insurance company intending to engage in insurance business nationwide, the actual paid-up capital in cash may not be less than 500 million Renminbi yuan; For setting up an insurance company intending to operate insurance business in a specially-designated area, the actual paid-up capital in cash may not be less than 200 million Renminbi yuan; For setting up a branch company to be located in the place where the government of a province, autonomous region, municipality directly under the Central Government or a city separately listed in budget and plan is situated, the working capital may not be lower than 50 million Renminbi yuan.
2. Chairman, vice chairmen, general manager and deputy general managers of an insurance company, general manager and deputy general managers of a branch company, manager and deputy manager of a sub-branch company, and director and deputy directors of a business office or a business department (hereinafter referred to as "principal persons in charge") must meet the qualification requirements set forth by the People's Bank of China.
3. Among the employees of an insurance company, 60 percent or more shall be persons who have experiences in insurance business and graduates of insurance major or related majors from colleges and universities. For a life insurance company, it must have at least one actuary approved by the People's Bank of China.
4. It shall have its place of business and office equipment compatible to its business scale and number of employees.
5. Shareholders of an insurance limited liability company must meet the relevant requirements on investment in financial organizations laid down by the People's Bank of China.
6. In applying to set up a branch company, the insurance company must have started business for a minimum of one year and have a good performance of its businesses, an adequate indemnity and payment ability and an improved and perfect internal management system, and may not have any serious irregularity or any record of major and grave case.
7. Other requirements set forth by the People's Bank of China.
Article 6
Insurance companies shall apply to set up branches in line with the incremental amount of their premium income.
Upon an increase of every 100 million Renminbi yuan in its premium income, an insurance company may apply to set up, within the area of its business activities, one branch company.
Upon an increase of every 50 million Renminbi yuan in its premium income, a branch company may apply to set up, within its area of jurisdiction, one sub-branch company.
Upon an increase of every 20 million Renminbi yuan in its premium income, a branch company or sub-branch company may apply to set up, within its area of jurisdiction, one business office.
An insurance company may, in one city, set up only one branch company.
Article 7
Under the conditions of its good business performance, a sub-branch company may apply to be upgraded to a branch company at the time when its premium income reaches 40 million yuan; and a business office may apply to be upgraded to a sub-branch company at the time when its premium income reaches 10 million yuan.
Article 8
The People's Bank of China adopts a two-level examination and approval system for the establishment and upgradation of insurance companies and their branches.
1. The establishment and upgradation of the following organizations shall be subject to examination and approval of the head office of the People's Bank of China:
(1). insurance companies;
(2). branch companies of insurance companies, and upgradation from sub-branch companies to branch companies;
(3). representative offices of insurance companies; and
(4). insurance organizations operating tentatively.
2. The establishment and upgradation of the following organizations shall be subject to examination and approval of the branch offices of the People's Bank of China at the level of provinces, autonomous regions, municipalities directly under the Central Government and cities listed separately in budget and plans:
(1). sub-branch companies;
(2). business offices and their upgradation to sub-branch companies; and
(3). business departments and their upgradation to sub-branch companies.
Prior to granting approval to preparations for the establishment of a sub-branch company or upgradation from a business office to a sub-branch company, it shall be reported to the head office of the People's Bank of China for the record. If the People's Bank of China does not raise any objection within 30 days after receiving the documents for records, approval shall be deemed as having granted.
Article 9
The establishment of an insurance organization shall be divided into two phases, namely preparation for establishment and inauguration of businesses.
Article 10
At the time of applying to prepare the establishment of an insurance organization, the following documents and materials shall be submitted:
1. an application report on the preparation;
2. a feasibility report on the preparation;
3. the plan on the preparation, and background information of the investors, including the time of establishment, department of examination and approval, legal representative, registered capital and financial position for the preceding three years;
4. resumes of the persons in charge of the preparation;
5. other materials and documents required by the People's Bank of China.
Article 11
The People's Bank of China shall decide to approve or disapprove the application on the preparation for establishment of an insurance company within a period of three months. If an application is not approved within this period, the applicant may not make the same application within six months.
Article 12
An insurance company shall, within six months following approval of the People's Bank of China, complete the preparatory work; if it fails to do so at the expiration of this period, the original document of approval on its preparation will cease to be valid automatically. Under special circumstances and with approval by the People's Bank of China, this period may be extended appropriately, but the maximum period for the preparation may not exceed one year. No insurance company may conduct any insurance business within its period of preparation for establishment.
Article 13
At the time when an insurance company applies to commence its business operations, the following materials and documents shall, in quintuplicate, be submitted to the People's Bank of China:
1. an application report for commencement of business operations;
2. capital verification certificate issued by a capital verification organization approved by the People's Bank of China, and photocopy of original documents of its capital or working capital;
3. resumes of the company's principal persons in charge to be appointed, and information on the basic composition of the company's employees;
4. documents evidencing the ownership of or right to the use of the place of business;
5. articles of association of the company in conformity to the provisions of the Insurance Law of the People's Republic of China and Company Law of the People's Republic of China. The articles of association shall include such matters and particulars as designation of the organization, registered capital, place of business, nature of the organization, business aims, scope of business, organizational form, operation and management, termination and liquidation;
6. reinsurance arrangement; and
7. other materials and documents required by the People's Bank of China.
Article 14
An insurance company approved by the People's Bank of China to commence business operations shall, on strength of the document of approval and the license for insurance business, proceed to complete registration formalities with the administrative department for industry and commerce, and may start business operation only after obtaining its business license.
Article 15
The People's Bank of China shall adopt a qualification examination system on the principal persons in charge of insurance organizations as provided by Paragraph 2 of Article 5 of these Regulations; Those who are not be examined or fail to pass the qualification examination may not assume the positions. These provisions shall also apply to the change of the principal persons in charge.
The qualifications of principal persons in charge for assuming their positions in insurance organizations shall be laid down by the People's Bank of China separately.
Article 16
The norms for naming branches of insurance companies are as follows:
1. branch company: insurance company + name of place where it is located + branch company;
2. sub-branch company: insurance company + name of place where it is located + sub-branch company;
3. business office: insurance company + name of place where it is located + sub-branch company + business office or business department.
Article 17
An insurance company which does not have branches can conduct businesses only in the place where it is registered.
Other insurance organizations can conduct businesses only in the areas approved by the People's Bank of China.
Article 18
The following modifications and changes of insurance organizations shall be subject to prior approval of the People's Bank of China:
1. increase or reduction of their registered capital, and adjustment of
their share composition;
2. change of their organizational form;
3. adjustment in business scope;
4. change of their names
5. split or merger of the organizations;
6. revision of their articles of association;
7. change of their places of business; and
8. other modifications and changes deemed necessary by the People's Bank of China for approval.
The reporting procedures and limits of power for examination and approval for the above-listed changes and modifications shall be governed by Article 8 of these Regulations.
Article 19
If an insurance organization intends to terminate its business operations according to the Insurance Law, it shall report the matter to the People's Bank of China for approval.
Chapter III Business Scope of Insurance Companies
Article 20
No insurance company may conduct businesses of property insurance and life insurance concurrently.
Article 21
The business scope of a property insurance company shall be restricted to:
1. property insurance businesses such as property damage insurance, liability insurance, credit insurance and agricultural insurance; and
2. reinsurance of the above-listed insurance businesses.
Article 22
The business scope of a life insurance company shall be restricted to:
1. life insurance, accident insurance and health insurance; and
2. reinsurance of the above-listed insurance businesses.
Article 23
The business scope of a reinsurance company shall be restricted to:
1. accepting outward reinsurance businesses of the primary insurance companies under Articles 21 and 22 of these Regulations;
2. accepting, upon approval by the People's Bank of China, statutory reinsurance businesses of domestic insurance companies;
3. conducting retroceding businesses; and
4. conducting, upon approval by the People's Bank of China, international reinsurance businesses.
Chapter IV Control and Use of Funds for Insurance
Article 24
Funds for insurance mean the insurance companies' capital fund, guarantee fund, working capital, various reserve funds, accumulated fund, welfare fund, undistributed surplus, insurance guarantee fund as well as other funds as prescribed by the State.
Article 25
The aggregate working capital appropriated by an insurance company to its branch companies may not exceed 60 percent of the sum total of its capital fund and accumulated fund.
Article 26
Insurance companies engaging in insurance businesses nationwide must deposit their guarantee fund to the head office of the People's Bank of China; Insurance companies conducting business activities within specially-designated areas must deposit their guarantee fund to the branch offices of the People's Bank of China at the level of provinces, autonomous regions, municipalities directly under the Central Government and cities listed separately in budget and plans in the places where such companies are registered.
Without approval of the People's Bank of China, no insurance company may draw on its guarantee fund.
Article 27
Insurance companies engaging in insurance businesses other than life insurance business shall appropriate the unexpired liability reserve fund from the self-retained insurance premiums of the current year; the amount so appropriated and carried forward may not be lower than 50 percent of the self-retained insurance premiums of the current year.
The unexpired liability reserve fund for life insurance business shall be appropriated according to the aggregate net value of valid life insurance policies.
The unexpired liability reserve fund of insurance companies must be real and adequate.
Article 28
Insurance companies shall allocate the outstanding loss reserve fund in accordance with the amount of insurance indemnity or payment already claimed for, as well as the amount of insurance indemnity or payment not yet claimed for but against which the insurance accidents have already happened.
Article 29
In distributing after-tax profits of the current year, an insurance company shall allocate 10 percent of the profits as the company's statutory accumulated fund, and 5 percent to 10 percent of the profits as the company's statutory welfare fund. When a company's statutory accumulated fund amounts to 50 percent or more of its registered capital, such fund will not be allocated.
After allocating the statutory accumulated fund from the after-tax profits, an insurance company may, upon a resolution of its shareholders' assembly, appropriate the optional accumulated fund.
Article 30
The accumulated fund of an insurance company shall be used to make up losses of the company, to expand the company's business operation and scale or to increase the company's capital fund.
When an insurance limited liability company transforms the accumulated fund into its capital fund upon a resolution of the shareholders' assembly, its shareholders shall increase their amounts of paid-up capital according to the original ratio of contribution. However, if the statutory accumulated fund is to be transformed into the capital fund, the amount of such accumulated fund not to be transformed may not be lower than 25 percent of its registered capital.
Statutory welfare fund of an insurance company shall be used for the collective welfare of its employees.
Article 31
With exception of the guarantee fund, all deposits of the insurance companies must be made in large and trustworthy commercial banks.
Article 32
An insurance company shall allocate the insurance guarantee fund at 1 percent of its insurance premium income of the current year, and if this fund so allocated amounts to 10 percent of its total assets, it will cease to be allocated.
The insurance guarantee fund shall be allocated separately, and be deposited with the People's Bank of China or commercial banks designated by the People's Bank of China in special accounts.
Article 33
The use of funds for insurance shall be restricted to:
1. bank deposits;
2. buying and selling government bonds;
3. buying and selling financial bonds; and
4. other forms of use of funds set by the State Council.
Chapter V Control of License
Article 34
The license for insurance business is the official documentary evidence of insurance organizations to engage in insurance businesses. It is classified into the legal person license of insurance organizations and the license to conduct insurance business.
Article 35
The People's Bank of China shall design, print, issue, withhold and revoke the licenses for insurance business according to law, no other units or persons may design, print, issue, confiscate or seize such licenses.
Article 36
A license for insurance business is composed of the original and duplicate copies, in which such contents as designation and code of the insurance organization, its nature and organizational form, amount of registered capital or working capital, legal representative and principal persons in charge, business scope, date of issuance and term of validity are included.
Article 37
The insurance organizations shall place the original copy of their licenses for insurance business at noticeable places at their places of business, and shall properly keep the duplicate copies for the purpose of examination and check. It shall be forbidden to feign, alter, lease, transfer, assign or sell such licenses.
Article 38
A license shall be renewed every three years. In case of loss, it shall be declared, within 15 days from discovering the loss, to be valid any more in the newspapers designated by the People's Bank of China or its branch. The insurance organization losing its license shall, on strength of a written self-criticism and a statement, apply for a new one with the bank originally issued it.
Article 39
The People's Bank of China will charge, according to regulations, a certain amount of fees on the insurance organizations applying for the license or its renewal.
Chapter VI Control of Insurance Clauses and Premium Rates
Article 40
Documents of insurance companies such as insurance clauses and insurance premium rates shall all be made in Chinese and, if it is so required due to businesses, foreign languages may be appended, however, the Chinese shall prevail whenever any inconsistency between Chinese and foreign languages occurs.
Article 41
Major types of insurance mean those approved by the People's Bank of China. The People's Bank of China shall have the power to make their adjustment according to market conditions.
Basic clauses and premium rates for major types of insurance shall be formulated by the head office of the People's Bank of China.
Article 42
Insurance clauses and premium rates for other types of insurance drafted by insurance companies shall be reported to the head office of the People's Bank of China for the record.
Insurance clauses and premium rates for other types of insurance drafted by branch companies of insurance companies shall be reported to the branch offices of the People's Bank of China at the level of provinces, autonomous regions, municipalities directly under the Central Government and cities listed separately in budget and plans for the record; if the People's Bank of China does not raise any objection to the insurance clauses and insurance premium rates within 30 days after receiving the application documents for the record, approval shall be deemed as being granted.
No sub-branch company or business office of insurance companies may draft any insurance clauses and insurance premium rates.
Article 43
At the time of reporting property insurance clauses and insurance premium rates for the record, the insurance company shall submit the following documents:
1. documents for the record on the insurance clauses and insurance premium rates in quintuplicate;
2. market analysis of the product intended, information on the losses of the subject-matter of the insurance for the preceding three years, arranged rate of insurance indemnity, various management costs estimated and expected profit rate;
3. calculation formula and method of insurance premium rates; and
4. other materials and documents required by the People's Bank of China.
Article 44
At the time of reporting life insurance clauses and insurance premium rates for the record, the insurance company shall submit the following documents:
1. documents for the record on the insurance clauses and insurance premium rates in quintuplicate;
2. market analysis of the product intended, arranged rates, estimated rates of costs, expected profit rate and table of life expectancy;
3. calculation formula and method for insurance premium rates, insurance liability reserve fund and insurance surrender value; and
4. other materials and documents required by the People's Bank of China.
Article 45
An insurance company may, at the time of reporting insurance clauses and premium rates for a new type of insurance for the record, apply to the People's Bank of China for a protection period of six months for it. During this protection period, other insurance companies may not conduct this new kind of insurance business.
Article 46
In the same province, autonomous region and municipality directly under the Central Government, all insurance companies must adopt the uniform insurance clauses, insurance premium rates and range of fluctuation for the same type of insurance. The maximum range of fluctuation of premium rates shall be 30 percent, and the specific range shall be decided, according to the actual local conditions, by the branch offices of the People's Bank of China of the provinces, autonomous regions and municipalities directly under the Central Government.
Article 47
Record materials of the insurance companies and their branches such as annual indemnity and payment rates, rates of costs and profit rates must be properly kept with the minimum period of 10 years.
Chapter VII Control of Indemnity and Payment Ability of Insurance Companies
Article 48
Insurance companies shall have the minimum indemnity and payment ability compatible to their scales of business operations.
Article 49
The minimum indemnity and payment ability of an insurance company shall, as provided by the People's Bank of China, be the balance of its actual assets after deducting its actual liabilities.
The actual assets of an insurance company shall be the balance of its total assets after deducting the following items of assets:
1. various advance payments other than advance indemnity payment;
2. deferred assets;
3. intangible assets;
4. low value and consumable goods;
5. the portion of bad debts actually occurred among all account receivable;
6. the part of costs in obtaining negotiable securities in excess of the current market price;
7. the part of bad debts already occurred in the use of funds;
8. one-tenth of its immovable and fixed assets; and
9. other assets certified by the People's Bank of China as not being able to be realized in the prescribed period of time, or the portion that might be lost in the course of realization.
The actual liabilities of an insurance company shall be the balance of its total assets after deducting the actual paid-up capital fund, accumulated fund, welfare fund and the undistributed surplus.
Article 50
The standards of minimum indemnity and payment ability of property insurance companies:
1. In the case where the net self-retained premium income of the preceding year is smaller than or equivalent to 200 million Renminbi yuan, its indemnity and payment ability may not be lower than 100 million Renminbi yuan;
2. In the case where the net self-retained premium income of the preceding year is bigger than 200 million Renminbi yuan but is smaller than or equivalent to 3 billion Renminbi yuan, its indemnity and payment ability may not be lower than 100 million Renminbi yuan or one-third of its self-retained premiums, the higher of the two shall be the minimum limit;
3. In the case where the net self-retained premium income of the preceding year is bigger than 3 billion Renminbi yuan, its indemnity and payment ability may not be lower than 1 billion Renminbi yuan or one-fourth of its net self-retained premiums, the higher of the two shall be the minimum limit.
Article 51
The standards of minimum indemnity and payment ability of life insurance companies:
1. If the amount of its actual liabilities is smaller than or equivalent to 300 million Renminbi yuan, its minimum indemnity and payment ability may not be lower than 100 million Renminbi yuan;
2. If the amount of its actual liabilities is bigger than 300 million Renminbi yuan but is smaller than or equivalent to 1 billion Renminbi yuan, its minimum indemnity and payment ability may not be lower than 100 million Renminbi yuan or one-fourth of its actual liabilities, the higher of the two shall be the minimum limit;
3. If the amount of its actual liabilities is bigger than 1 billion Renminbi yuan but is smaller than or equivalent to 3 billion Renminbi yuan, its minimum indemnity and payment ability may not be lower than 250 million Renminbi yuan or one-sixth of its actual liabilities, the higher of the two shall be the minimum limit;
4. If the amount of its actual liabilities is bigger than 3 billion Renminbi yuan, its minimum indemnity and payment ability may not be lower than 500 million Renminbi yuan or one-eighth of its actual liabilities, the higher of the two shall be the minimum limit;
Article 52
When the indemnity and payment ability of an insurance company is below the standard set forth by these Regulations, it shall be dealt with according to the following methods:
1. If its amount in deficiency is lower than the minimum indemnity and payment ability by less than 5 percent, the company shall promptly resort to reinsurance, business transfer or other methods approved by the People's Bank of China, adjust its assets-liability structure within 30 days till the standard of the minimum indemnity and payment ability is met.
2. If its amount in deficiency is higher than 5 percent but lower than 20 percent of the minimum indemnity and payment ability, the company shall, from the day of discovery of such a deficiency, immediately stop underwriting any new insurance business; submit, within 10 days, to the People's Bank of China its self-criticism report, remedial arrangement and the plan to deal with the person(s) held directly responsible; and resort to, within 30 days, reinsurance, business transfer, urgent expansion of shares to increase capital from shareholders or other methods approved by the People's Bank of China to make up the deficiency.
3. If the amount in deficiency is bigger than 20 percent but lower than 40 percent, the People's Bank of China may decide to take the following measures:
(1). order to rectify within a given period of time;
(2). order to suspend part of the company's businesses;
(3). order to suspend business operations; or
(4). other measures.
4. If the amount in deficiency is higher than 40 percent, the company shall apply to a people's court to declare bankrupt according to law.
Chapter VIII Control of Insurance Business Activities
Article 53
Insurance companies shall, in conducting operation activities, observe the principles of fairness, impartiality, reasonableness and competition.
Article 54
No insurance company may commission any insurance agent not approved by the People's Bank of China for the conducting of its business, or may accept insurance business solicited by any insurance intermediary not approved by the People's Bank of China.
Article 55
Insurance companies and their employees may not offer any insurance rebate or other benefits other than those provided by insurance contracts to the insurance applicants, the insured and the beneficiaries.
Article 56
Publicity and promotion brochures of the insurance companies shall state the designations of the insurance companies.
Article 57
Publicity and promotion brochures of the insurance companies may not disclose any forecast information about the companies' profits or distribution of dividend.
Article 58
Insurance personnel may not acquire business in areas not approved by the People's Bank of China.
Article 59
When an insurance company receives a claim for indemnity or payment of insurance benefit from the insured or the beneficiary, it shall examine and verify the claim without delay. Where the claim falls under the insurance liability, the company shall, within 10 days after reaching an agreement with the insured or the beneficiary on the indemnity or payment of insurance benefit, fulfill its liability in making indemnity or payment of insurance benefits. Where the insurance contract contains provisions on the term of performance of indemnity or payment of insurance benefits, the provisions of the contract shall govern. If an insurer fails to perform its duty as provided by this Article, the insurer shall, in addition to making payment of insurance benefits, also compensate economic losses suffered therefrom by the insured or the beneficiary.
Article 60
An insurance company which fails to determine the amount of indemnity or payment of insurance benefits within 60 days from the date on which the claim for indemnity or payment of the insurance benefits as well as relevant proofs and materials are received, shall pay the minimum amount which can be determined by the proofs and materials already available; after the amount of indemnity or payment of insurance benefits is eventually determined, the insurer shall pay the corresponding gap.
If an insurance company intentionally does not determine or pay the minimum amount of indemnity or payment of insurance benefits, the company shall compensate the economic losses thus suffered therefrom by the insured or the beneficiary.
Article 61
An insurance company may not, at the excuse that the reinsurance company has not paid the indemnity of reinsurance, refuse to perform its duty in making indemnity or payment of insurance benefits, and may not refuse to pay reinsurance premiums to the reinsurance company at the excuse that the insurance applicant has not paid insurance premiums.
A reinsurer may not refuse to pay reinsurance indemnity at the excuse that the insurance applicant, the insured or the beneficiary has not performed its obligations.
Article 62
With the exception of life insurance, an insurance company shall cede insurance of 20 percent of each insurance business it underwrites to the insurance company authorized by the People's Bank of China (hereinafter referred to as the "authorized company").
Article 63
Insurance companies and branch companies of foreign-capital insurance companies shall, prior to December 15 each year, reach agreements with the authorized companies on reinsurance arrangement for the statutory reinsurance business for the following year.
Article 64
Where an insurance company needs to offer outward reinsurance, it shall give priority to insurance companies in the territory of the People's Republic of China, notwithstanding, under the condition that the insurance companies in the territory of the People's Republic of China refuse to accept the reinsurance or the reinsurance terms of insurance companies outside China are apparently preferential, it may offer reinsurance to insurance companies outside China.
Under equal conditions, reinsurance companies shall give priority in accepting outward reinsurance by domestic insurance companies; when retroceding reinsurance is needed for the reinsurance business accepted by reinsurance companies, priority shall be given to domestic insurance companies.
Chapter IX Supervisory Control
Article 65
The People's Bank of China shall adopt a routine and annual inspection system on insurance organizations.
The head office of the People's Bank of China shall be in charge of inspections into insurance companies operating businesses nationwide; inspections into insurance companies conducting businesses in particular regions shall be undertaken by the branch offices of the People's Bank of China in the places where such companies are registered; inspections into the branches of insurance companies shall be undertaken by the branch offices of the People's Bank of China in the respective jurisdictions.
Article 66
Matters subject to annual and routine inspections into insurance organizations shall include:
1. completion of the procedures of examination and approval for the establishment or modifications and changes of such organizations;
2. conformity of materials and documents submitted and reported with the actual conditions;
3. faithfulness and adequacy of the capital fund, working capital, accumulated fund and various reserve funds;
4. whether or not the insurance organizations go beyond their scope of business or operate inter-regional businesses;
5. implementation of the insurance clauses and insurance premium rates as stipulated;
6. completion of the procedures for the appointment or change of persons in charge of the organizations;
7. performance evaluation of business operations and financial conditions, and completion and truthfulness of the statements;
8. conformity of the places of business and safety installations with the requirements; and
9. other matters deemed necessary by the People's Bank of China for inspections.
Article 67
The annual inspection of insurance organizations shall be conducted in the first quarter each year. An insurance organization shall, within 15 days after receiving the notification on annual inspection, submit the following materials and documents to the People's Bank of China and its branch office:
1. annual inspection report;
2. balance sheet and profit-loss statement;
3. report on annual final account;
4. duplicate copy of "Legal Person License of the Insurance Organization" or "License to Conduct Insurance Business"; and
5. other materials and documents required by the People's Bank of China.
Article 68
Where an insurance organization passes the annual inspection, the People's Bank of China shall affix its official seal to the duplicate copy of the organization's license; those which fail to pass shall be ordered to make correction with a set period of time.
Article 69
Only after an insurance company has amortized its establishment expenses, made up its losses and allocated accumulated fund and welfare fund can it distribute its after-tax profits.
Article 70
Insurance companies shall submit timely their business reports, actuarial reports, financial and accounting reports and relevant statements to the People's Bank of China in accordance with regulations.
Article 71
The accounting and statistical statements of insurance companies shall be complete, truthful, timely and accurate.
Article 72
The business reports, financial and accounting reports and relevant statements of insurance companies shall be signed by the companies' legal persons or general managers and certified public accountants approved by the People's Bank of China. The actuarial reports of life insurance companies shall be signed and sealed by the actuaries approved by the People's Bank of China. Reports and statements of branches of insurance companies shall be signed by the persons in charge authorized by their superior companies and be stamped with the companies' official seals.
Chapter X Penalty Provisions
Article 73
Anyone who, in violation of these Regulations, establishes an insurance organization without approval or conducts illegally insurance business or business similar to insurance business, shall be investigated for criminal liability according to law, and in that case the People's Bank of China shall outlaw such an organization or conduct; if the circumstance is of a minor nature and does not constitute a crime, the People's Bank of China and its branch office shall confiscate the illegal gains therefrom and impose a fine exceeding 100,000 yuan but not exceeding 500,000 yuan thereon. If the case is of a serious nature, it shall be referred to a judicial organ to handle.
Article 74
An insurance organization which violates a provision of Article 18 of these Regulations shall be ordered to make correction within a period of 30 days and be imposed a fine exceeding 10,000 yuan but not exceeding 100,000 yuan concurrently. In case of a failure to make such corrections within the period, a public notice of criticism shall be imposed thereon, and a fine exceeding 1,000 yuan but not exceeding 10,000 yuan shall be imposed concurrently on the principal persons in charge of the organization and persons held directly responsible.
Article 75
Anyone who commits any of the following acts shall be ordered to make correction within a period of 30 days and shall be imposed a fine exceeding 100,000 yuan but not exceeding 500,000 yuan concurrently; In case of a failure to make such corrections within the period, a public notice of criticism shall be imposed thereon, and a fine exceeding 1,000 yuan but not exceeding 20,000 yuan shall be imposed concurrently on the principal persons in charge of the organization and persons held directly responsible:
1. to provide a false report, statement, document or materials; or
2. to refuse or hinder inspection and supervision carried out according to law.
Article 76
Those who commit over-underwriting shall be ordered to adjust their business scale by means of outward insurance, transfer of business or expansion of shares to increase capital, and shall be imposed a fine exceeding 50,000 yuan but not exceeding 300,000 yuan concurrently.
Article 77
Anyone who, in violation of these Regulations, commits any of the following acts, shall be ordered to make correction within a period of 30 days; In case of a failure to make such correction within the period, a public notice of criticism shall be imposed thereon, and a fine exceeding 10,000 yuan but not exceeding 100,000 yuan shall be imposed thereon concurrently:
1. failing to submit relevant reports, statements, documents or other materials as required; or
2. failing to submit, as required, the insurance clauses and insurance premium rates for the planned new type of insurance for the record.
Article 78
An insurance organization which fails to carry on businesses according to the basic insurance clauses and insurance premium rates provided by the People's Bank of China shall be ordered to make correction within a period of 30 days and be imposed a fine exceeding 100,000 yuan but not exceeding 500,000 yuan concurrently; if failing to make such correction within the period, a public notice of criticism shall be imposed thereon, any new business shall be prohibited, its principal person in charge shall be replaced or its license for insurance business shall be revoked.
Article 79
Where an insurance organization accepts insurance business solicited by an intermediary not approved by the People's Bank of China and pays remuneration thereto, a public notice of criticism shall be imposed thereon and a fine equivalent to one to five times of the amount of remuneration it has paid shall be imposed thereon concurrently.
Article 80
Where an insurance organization offers insurance rebate to the insurance applicant or the insured, it shall, in addition to being ordered to recover the rebate and imposed a fine equivalent to the amount of the rebate, also be given a public notice of criticism.
Article 81
Where an insurance organization engages in insurance business beyond its areas of business without approval and the insurance premium income is below 10 million yuan, it shall be ordered to return the insurance premiums or to transfer without consideration the insurance business to other insurance companies within a period of 30 days, and shall be imposed a fine exceeding 100,000 yuan but not exceeding 500,000 yuan concurrently; if the insurance premiums income exceeds 10 million yuan, a public notice of criticism shall be imposed thereon and a fine exceeding 500,000 yuan but not exceeding 1 million yuan shall be imposed thereon concurrently, in addition to being ordered to return the insurance premiums or transfer without consideration the insurance business to other insurance companies within a period of 30 days. If it fails to make correction within the period, additional penalties such as suspending to underwrite new business, being ordered to replace the persons in charge of the organization or being revoked its license for insurance business shall be imposed thereon. In case of an insurance accident prior to the return of insurance premiums, the insurance company shall also be liable for making indemnity or payment of insurance benefits.
Article 82
Any insurance personnel who, by taking the advantage of his job, intentionally fabricated an insurance accident that had never happened to file a false compensation claim so as to fraudulently get insurance benefits and was thus investigated for criminal liability according to law, may not engage in insurance business, insurance agency or insurance brokerage any more during his entire life.
Article 83
An insurance organization which was established without approval as provided by these Regulations or was established with approval obtained by means of cheating shall be illegal and void from the beginning, and in that case the People's Bank of China shall confiscate the organization's illegal gains therefrom and mete out a public notice of criticism thereto and impose thereon a fine exceeding 50,000 yuan but not exceeding 500,000 yuan concurrently. If a crime is constituted, the case shall be referred to a judicial organ to investigate the criminal liability according to law. Its insurance businesses already acquired shall be transferred to other insurance organizations in the place within a period of 60 days.
Article 84
An insurance organization which, in violation of these Regulations, commits any of the following acts, shall be ordered to make correction within a period of 60 days and be imposed a fine exceeding 50,000 yuan but not exceeding 300,000 yuan concurrently; if the circumstance is of a serious nature, it shall be ordered to suspend underwriting any new business or be revoked of its license for insurance business:
1. failing to allocate, as stipulated, the guarantee fund or using it without approval;
2. failing to appropriate or carry forward, as stipulated, the unexpired liability reserve fund or outstanding loss reserve fund;
3. failing to allocate, as stipulated, the accumulated fund;
4. using, in violation of regulations, the fund for insurance;
5. splitting or merging without approval; or
6. failing to allocate working capital to the subsidiary as provided, or drawing on working capital from the subsidiary without approval.
Article 85
An insurance organization which, in violation of the Insurance Law, underwrites insurance business with death as the term for payment of insurance benefits for a person without capacity for civil conduct, shall be ordered to return, within a period of 30 days after the discovery, the insurance premiums already collected, and be imposed a fine exceeding 50,000 yuan but not exceeding 300,000 yuan concurrently.
Article 86
If a representative office of an insurance company engages in insurance business, insurance agency business or insurance brokerage business, its illegal gains therefrom shall be confiscated, and a public notice of criticism shall be meted out thereto and a fine exceeding 10,000 yuan but not exceeding 50,000 yuan shall be imposed thereon concurrently; if the circumstance is of a serious nature, additional penalties such as replacing the person in charge of the representative office or terminating the representative office shall be imposed concurrently.
Article 87
For infringements of regulations other than those stipulated in Article 74 to 88 of these Regulations, the People's Bank of China shall, in line with the nature of seriousness, give separately such penalties as giving a public notice of criticism, imposing a fine, ordering to replace the persons in charge of the organizations, suspending business activities for rectification or revoking their licenses for insurance business.
The above-listed penalties may be imposed concurrently.
Chapter XI Supplementary Provisions
Article 88
Unless otherwise provided by laws, administrative regulations or the People's Bank of China, these Regulations shall also apply to branch companies of foreign-capital insurance companies and Sino-foreign joint venture insurance companies.
Article 89
The People's Bank of China shall be responsible for the interpretation of these Regulations, and the same with amendments to them.
Article 90
These Regulations shall come into force on the date of promulgation.
Appendix: List of major forms of insurance
I. Property insurance
Basic insurance of property insurance
Comprehensive insurance of property insurance
Contractor's all-risk insurance
All-risk insurance for installation projects
Machine breakdown insurance
Ship-building insurance
Foreign-related property insurance
All-risk insurance for foreign-related property
II. Insurance for means of transport
Motor vehicle insurance
Tractor insurance
Hull insurance
Fishing vessel insurance
Aircraft insurance
Automobile insurance
Offshore and inland-water ship insurance
III. Cargo transportation insurance
Domestic cargo transportation insurance
Ocean cargo shipping insurance
Land cargo transportation insurance
Container insurance
Postal parcel insurance
IV. Liability insurance
Third party liability insurance
Public liability insurance
Employers' liability insurance
Product liability insurance
Credit card insurance
V. Guarantee insurance
Investment insurance
Guarantee and indemnity insurance
Employer's fidelity guarantee insurance
VI. Life insurance
Simple personal insurance
Longevity and health insurance
Group personal insurance
Group life insurance
Education and marriage insurance for children
Safety insurance for single child
VII. Accident insurance
Personal accident insurance
Group personal accident insurance
VIII. Annuity insurance
Personal pension insurance
Group pension insurance
IX. Health insurance
Medical insurance against diseases
