(Adopted at the 49th Executing Meeting of the State Council on December 5, 2001, promulgated by Decree No. 336 of the Premier of the People's Republic of China on December 12, 2001,and effective on February 1, 2002.)
Chapter I General Provisions
Article 1
For the purposes of suiting the needs of opening to the outside world and economic development, strictly and soundly supervising and administering foreign-funded insurance companies and promoting the healthy development of the insurance industry, this Regulation is formulated.
Article 2
In this Regulation, foreign-funded insurance companies mean the following insurance companies established and managed in the territory of China upon approval and under the provisions of relevant laws and administrative regulations of the People's Republic of China:
1. Joint-funded insurance companies managed in the territory of China by foreign insurance companies with Chinese companies or enterprises (hereinafter cited as the joint-funded insurance company);
2. Foreign capital insurance companies invested and managed in the territory of China by foreign insurance companies (hereinafter cited as the sole-funded insurance company); and
3. Branch offices established in the territory of China by foreign insurance companies (hereinafter cited as the branch office of the foreign insurance company).
Article 3
Foreign-funded insurance companies must comply with laws and regulations of China, and may not prejudice the social and public interests of China.
Chinese Laws shall protect lawful business activities and legitimate interests of foreign-funded insurance companies.
Article 4
China Insurance Regulatory Commission (hereinafter cited as the CIRC) shall be responsible for supervising and administering foreign-funded insurance companies. According to its authorization, its accredited offices shall impose the routine supervision and administration on foreign-funded insurance companies within their respective jurisdictions.
Chapter II Establishment and Registration
Article 5
The establishment of foreign-funded insurance companies shall be in possession of approval of the CIRC.
Under the relevant provisions, the CIRC shall determine the areas where foreign-funded insurance companies may be established.
Article 6
Under the relevant provisions, the CIRC shall specify the form and foreign capital ratio for foreign-funded insurance companies engaging in personal insurance business or in property insurance business.
Article 7
The minimum registered capital of the joint- or sole-funded insurance company shall be 200 millions RMB yuan or the convertible money equivalent to that amount. The minimum registered capital must be the money capital paid in. The contributions of foreign insurance companies shall be the convertible money.
The working capital of the branch office of the foreign insurance company shall be the convertible money equivalent to not less than 200 million RMB yuan rendered gratis by the head office of that company.
According to the business scope and scale of foreign-funded insurance companies, the CIRC may raise the minimum registered or working capital specified in the two paragraphs above.
Article 8
The foreign insurance company applying for establishing a foreign-funded insurance company shall satisfy the following conditions:
1. Having carried on insurance business in more than 30 years;
2. Having a representative office in the territory of China in more than two years;
3. Having total assets of not less than US $ 50 billion at the end of the year prior to the application;
4. Having a sound system for insurance control in the country or region where it is located, and being effectively controlled by the competent authorities of that country or region;
5. Having the paying ability set by the country or region where it is located;
6. Having the consent from the competent authority of the country or region where it is located for its application; and
7. Satisfying other prudential conditions specified by the CIRC.
Article 9
The applicant for the foreign-funded insurance company shall file a request in writing with, and submit the following materials to, the CIRC:
1. The written request signed by the legal representative of the applicant, or in respect of the joint-funded insurance company, the written request signed by legal representatives of all the parties thereto;
2. The business license (its copy) of the foreign applicant, the paying ability certificate and the written opinion on the request, which shall be issued by the competent authorities of the country or region where the foreign applicant is located;
3. Company articles of association and annual reports in the last three years of the foreign applicant;
4. In respect of the joint-funded insurance company, relevant materials about the Chinese applicant;
5. The feasibility study report and preparatory plan for the company intended;
6. The name list, curricula vitae and qualification certificates of the persons responsible for preparation of the company intended; and
7. Other materials specified by the CIRC.
Article 10
The CIRC shall make a preliminary examination over the request for the foreign-funded insurance company and within six months from the date of receipt of all materials of request, make a decision of acceptance or denial. If deciding to accept, it shall issue an official form of application; if deciding to deny, it shall notify the applicant and give the reasons in writing.
Article 11
Within one year from the date of receipt of the official form of application, the applicant shall complete preparations. If he fails to complete preparations as scheduled but has justified grounds, the period for preparations may be extended for three months upon approval by the CIRC. If he still fails to complete preparations within the extended period, the decision of acceptance made by the CIRC shall automatically become invalid. After preparations, the applicant shall submit the official form of application he filled out, together with the following documents, to the CIRC for examination and approval:
1. The report on preparations;
2. The articles of association of the company intended;
3. Investors and their contributions in the company intended;
4. The capital verification certificate issued by the official verification agency;
5. The letter of authorization to the principal officers responsible for the company intended;
6. The name list, curricula vitae and qualification certificates of the superior managerial staffs of the company intended;
7. The business program and reinsurance plan of the company intended in the near future three years;
8. Descriptions on insurance clauses, premium and rate, and liability reserve computation for the types of insurance intended in the territory of China;
9. Materials about the business site and other facilities for the business of the company intended;
10. In respect of the branch office of the foreign insurance company, the guarantee of the head office for assuming liabilities for taxes and debts of the branch office;
11. In respect of the joint-funded insurance company, the contract for joint-funded business; and
12. Other documents specified by the CIRC.
Article 12
The CIRC shall make the decision of approval or disapproval within 60 days from the date of receipt of all the official documents of application. If deciding to approve, it shall issue the insurance business permit; if deciding to disapprove, it shall notify the applicant and give the reasons in writing.
If the foreign-funded insurance company is approved, the applicant shall accomplish registration at the industrial and commercial administration authority based on the insurance business permit and obtain the business license.
Article 13
After the foreign-funded insurance company is established, the guarantee reserve shall be allocated at 20% of the total registered or working capital and deposited in the bank designated by the CIRC. The guarantee reserve shall be used only for paying debts when it enters into liquidation and may not be used for other purposes.
Article 14
Under the relevant provisions, the CIRC shall examine and approve the branches of foreign-funded insurance companies in the territory of China.
Chapter III Business Scope
Article 15
Within the business scope approved by the CIRC, foreign-funded insurance companies may, wholly or partly, carry on the following types of insurance business according to law:
1. Property insurance business, including property damage insurance, liability insurance, credit insurance and others; and
2. Personal insurance business, including life insurance, health insurance, accident injury insurance and others;
Upon approval by the CIRC under the relevant provisions, foreign-funded insurance companies may carry on large commercial risk insurance business and block policy insurance business within the approved scope.
Article 16
No foreign-funded insurance company may concurrently carry on property insurance business and personal insurance business.
Article 17
Foreign-funded insurance companies may, according to law, carry on the following types of reinsurance of insurance business specified in Article 15 of this Regulation:
1. Outward reinsurance; and
2. Inward reinsurance.
Article 18
The specific scopes of business, regional area and service target of foreign-funded insurance companies shall be determined by the CIRC under the relevant provisions. Foreign-funded insurance companies may carry on insurance business activities only within the scopes determined.
Chapter IV Supervision and Administration
Article 19
The CIRC shall be entitled to inspect the conditions of business, finance and capital use of foreign-funded insurance companies, to require foreign-funded insurance companies to submit relevant documents, materials and written reports within the specified period and according to law, to punish and treat their irregular conducts.
Foreign-funded insurance companies shall accept the supervision and inspection imposed by the CIRC according to law, truthfully submit relevant documents, materials and written reports, and may not have any refusal, obstruction or concealment.
Article 20
Unless as approved by the CIRC, foreign-funded insurance companies may not have the following trading activities with their affiliate enterprises:
1. Inward or outward reinsurance; and
2. Assets trading or other trading.
Affiliate enterprises mentioned in the paragraph above mean the enterprises having any of the following relations with foreign-funded insurance companies:
1. Relation of control in respect of share or capital;
2. Being controlled by the same third party in respect of share or capital; or
3. Any other relation in respect of benefits.
Article 21
Branch offices of foreign insurance companies shall, within three months after the end of each accounting year, submit financial accounting reports in the last year of them and their head offices to the CIRC and publish these reports.
Article 22
The branch office of the foreign insurance company shall, if its head office is under any of the following situations, submit a written report on the situation to the CIRC within ten days after the date of occurrence of the situation:
1. To Change name, principal responsible person or place of registration;
2. To adjust the amount of capital;
3. To change the shareholder who holds more than 10% of the total capital or shares;
4. To adjust the business scope;
5. To be punished by the competent authority of the country or region where it is located;
6. To have a serious loss;
7. To split, merge, dissolve, be revoked or declared bankrupt according to law; or
8. To have any other situations specified by the CIRC.
Article 23
If the head office of the foreign insurance company is dissolved, revoked or declared bankrupt according to law, the CIRC shall prohibit the new business of the branch office.
Article 24
Foreign exchange insurance business of foreign-funded insurance companies shall comply with the provisions of the State on foreign exchange control.
Unless as approved by the foreign exchange authority of the State, foreign-funded insurance companies shall use RMB in counting and settling their insurance business in the territory of China.
Article 25
Documents, materials and written reports provided and submitted to the CIRC under the provisions of this Regulation shall be in the Chinese language.
Chapter V Termination and Liquidation
Article 26
When a foreign-funded insurance company falls into split, merge or occurrence of the cause of dissolution stipulated in its articles of association, it shall be dissolved after approval by the CIRC. If the foreign-funded insurance company is dissolved, it shall form a liquidation group and carry out liquidation according to law.
Foreign-funded insurance companies engaging in life insurance business may not be dissolved, but may be split or merged.
Article 27
When a foreign-funded insurance company violates laws and administrative regulations, thus being revoked its insurance business permit, the CIRC shall dissolve it and organize, in time, to form a liquidation group and to carry out liquidation according to law.
Article 28
When a foreign-funded insurance company enters into liquidation due to dissolution or revocation according to law, it shall make public notice in the newspaper at least three times within 60 days from the date of the formation of the liquidation group. The contents of public notice shall be in possession of approval of the CIRC.
Article 29
When a foreign-funded insurance company is unable to pay its due debts, the people's court shall declare its bankruptcy according to law with the consent of the CIRC. If the foreign-funded insurance company is declared bankruptcy, the people's court shall organize relevant departments such as the CIRC and relevant persons to form a liquidation group and to carry out liquidation.
Article 30
If a foreign-funded insurance company is dissolved, revoked or declared bankruptcy according to law, it may not transfer its property out of the territory of China before it pays its all debts.
Chapter VI Legal Responsibility
Article 31
If, in violation of the provisions of this Regulation, a foreign-funded insurance company is established without approval or illegally carries on insurance business activities, the CIRC shall ban it; and concurrently, its criminal responsibility shall be demanded according to law under the provisions of the Crime Law on crimes of illegally establishing financial institutions, crimes of illegally operations or other crimes; if the criminal punishment is inappropriate, the CIRC shall confiscate the ill-gotten gains therefrom and impose a fine exceeding one time but not exceeding five times the ill-gotten gains thereon; if the ill-gotten gains has not been received or is less than 200,000 yuan, the CIRC shall impose a fine exceeding 200,000 yuan but not exceeding 1,000,000 yuan thereon.
Article 32
If a foreign-funded insurance company, in violation of the provisions of this Regulation, carries on insurance business activities beyond the approved scope of business, regional area or service target, its criminal responsibility shall be demanded according to law under the provisions of the Crime Law on crimes of illegal operations or other crimes; if the criminal punishment is inappropriate, the CIRC shall order it to make corrections and to return the premium it received, confiscate the ill-gotten gains therefrom and impose a fine exceeding one time but not exceeding five times the ill-gotten gains thereon; if the ill-gotten gains has not been received or is less than 100,000 yuan, the CIRC shall impose a fine exceeding 100,000 yuan but not exceeding 500,000 yuan thereon; if it fails to make corrections as scheduled or causes a serious result, the CIRC shall order it to stop business within a specified limit of time or revoke the insurance business permit.
Article 33
If a foreign-funded insurance company, in violation of the provisions of this Regulation, commits any of the following acts, the CIRC shall order it to make corrections and impose a fine exceeding 50,000 yuan but not exceeding 300,000 yuan thereon; if the circumstance is serious, the CIRC may order it to stop the acceptance of new business or revoke the insurance business permit:
1. Failing to deposit the guarantee reserve according to the provisions or using the guarantee reserve in violation of the provisions;
2. Having trading activities with its affiliate enterprise in violation of the provisions; or
3. Failing to have the full amount of registered or working capital as required.
Article 34
If a foreign-funded insurance company, in violation of the provisions of this Regulation, commits any of the following acts, the CIRC shall order it to make corrections within a specified limit of time; if it fails to make corrections as scheduled, the CIRC shall impose a fine exceeding 10,000 yuan but not exceeding 100,000 yuan thereon:
1. Failing to submit or provide a document, material or written report according to the provisions; or
2. Failing to make public notice according to the provisions.
Article 35
If a foreign-funded insurance company, in violation of the provisions of this Regulation, commits any of the following acts, the CIRC shall impose a fine exceeding 100,000 yuan but not exceeding 500,000 yuan thereon:
1. To submit a false document, material or written report; or
2. To refuse or obstruct the supervision or inspection imposed according to law.
Article 36
If a foreign-funded insurance company, in violation of the provisions of this Regulation, transfers its property out of the territory of China, the CIRC shall order it to return back the property it transferred and impose a fine exceeding 20% of the value of that property but not exceeding the value of that property.
Article 37
If a foreign-funded insurance company violates the provisions of the relevant laws or administrative regulations of the State or this Regulation, the CIRC may terminate the qualifications of the superior managerial staffs of that foreign-funded insurance company for the positions in China within a certain period of time or even up within the whole life.
Chapter VII Supplementary Provisions
Article 38
Where this Regulation remains silent in respect of governing foreign-funded insurance companies, the Insurance Law of the People's Republic of China, other laws and administrative regulations and other relevant provisions of the State shall apply thereto.
Article 39
Insurance companies established and managed in the mainland by insurance companies of Hong Kong special administrative area, Macao special administrative area and Taiwan region shall be governed by applying mutatis mutandis this Regulation.
Article 40
This Regulation shall enter into operation on February 1, 2002.
