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(Adopted
at the 14th Session of the Standing Committee of the Eighth National
People's Congress on June 30, 1995, and promulgated by Order No.
51 of the President of the People's Republic of China on June 30,
1995)
Chapter
I General Provisions
Article
1 This Law is enacted with the purpose of regulating insurance activities,
protecting the legitimate rights of the parties to insurance, strengthening
supervision and control over the insurance business and contributing
to the healthy development of the insurance industry.
Article
2 Insurance as the term is used in this Law means a commercial insurance
whereby and insurance applicant, as contracted, pays the insurance
premium to the insurer, and the insurer bears a liability to indemnify
for property damage or losses caused by occurrence of possible accidents
that are agreed upon in the contract, or to pay the insurance benefit
when the insured person dies, is injured or disable, suffers diseases
or reaches the age or term agreed upon in the contract.
Article
3 This Law shall apply to all insurance activities within the territory
of the People¡¯s Republic of China.
Article
4 Whoever, in engaging in insurance activities, must abide by laws
and administrative regulations and follow the principle of voluntariness,
honesty and trustworthiness.
Article
5 Those who engage in the commercial insurance business must be
insurance companies which are established in accordance with this
Law. No other units or individuals may engage in the commercial
insurance business.
Article
6 Legal entities and other organization within the territory of
the People¡¯s Republic of China, when necessary to buy insurance
policies within the territory, shall effect the insurance from the
insurance companies within the territory of the People¡¯s Republic
of China.
Article
7 Insurance companies shall, in carrying on the insurance business,
follow the principle of fair competition and may not engage in unfair
competition.
Article
8 The financial supervision and control department of the State
Council is responsible for supervision and control over the insurance
business in accordance with this Law.
Chapter
II Insurance Contract
Section
1 General Provisions
Article
9 An insurance contract is an agreement whereby the relation of
rights and obligations of an insurance applicant and the insurer
is stipulated. An insurance applicant means a person who concludes
an insurance contract with an insurer and undertakes a liability
to pay the insurance premium as contracted. An insurer means an
insurance company which concludes insurance contracts with insurance
applicants and bears the liability to indemnify or to pay the insurance
benefit.
Article
10 In making insurance contracts, applicants and insurers shall
follow the principles of fairness, mutual benefits, unanimity through
negotiation and voluntariness, and may not harm the interests of
the social public. With the exception of those that must be insured
as provided by laws and administrative regulations, insurance companies
and other units may not force others entering into insurance contracts.
Article
11 An insurance applicant shall have an insurable interest over
the subject-matter insured. In case that an applicant has no insurable
interest over the subject-matter insured, the insurance contract
shall not be binding. An insurable interest means an interest that
an applicant has over the subject-matter insured, of which is recognized
by laws. As subject-matter insured means the property and its related
interests, or the life expectancy and human body which serve as
insurance objects.
Article
12 When an insurance applicant proposes an insurance request, and
an insurer agrees to accept the proposal, and after an agreement
on contract clauses is reached, the insurance contract shall be
deemed as concluded. The insurer shall promptly issue an insurance
policy or other certificates of insurance to the applicant, and
the insurance policy or other certificates of insurance shall contain
and specify the contents of the contract agreed upon by both parties.
Upon consent through negotiation, an applicant and an insurer may
also conclude an insurance contract in writing in other forms other
than those provided in the preceding paragraph.
Article
13 After an insurance contract is concluded, the applicant shall
pay the insurance premium as contracted and the insurer shall bear
the insurance liability from the time of commencement as contracted.
Article
14 Unless this Law otherwise provides or the insurance contract
otherwise stipulates, the applicant may terminate the insurance
contract after its conclusion.
Article
15 Unless this Law otherwise provides or the insurance contract
otherwise stipulates, the insurer may not terminate the insurance
contract after its conclusion.
Article
16 Before an insurance contract is signed, the insurer shall disclose
to the applicant the contents of clauses of the contract, and also
may make inquiry on conditions relating to the subject-matter to
be insured or the person to be insured, and the applicant shall
disclose thereto truthfully.
If
the applicant intentionally conceals facts, fails intentionally
to execute the truthfully-reporting responsibility, or fails to
execute the truthfully-reporting responsibility due to mistake,
which is sufficient enough to affect the insurer in deciding whether
or not to agree to the insurance or to raise the insurance premium
rate, the insurer shall have the right to terminate the insurance
contract. Where the applicant fails intentionally to execute the
truthfully-reporting responsibility, the insurer will not bear the
liability to indemnify or to pay the insurance benefit for the insurance
accidents that occur prior to the termination of the insurance contract,
and will not return the insurance premium. Where the applicant fails
to execute the truthfully-reporting responsibility due to mistake
and where the failure has a serious baring over the occurrence of
the insurance accident, the insurer will not bear the liability
to indemnify or to pay the insurance benefit for the insurance accident
that happens prior to the termination of the insurance contract,
however, may return the insurance premium. An insurance accident
mean an accident that falls in the scope of insurance liability
as contracted.
Article
17 Where an insurance contract contains clauses on liability exemption
of the insurer, the insurer shall disclose them clearly to the applicant
before the insurance contract is signed, and if the insurer fails
to make it clear to the applicant, such clauses will not have binding
force.
Article
18 An insurance contract shall contain the following particulars:
1.
name and address of the insurer;
2.
names and addresses of the applicant and the insured, as well as
the name and address of the beneficiary to a life insurance policy;
3.
subject-matter insured;
4.
insurance liability and liability exemption;
5.
insurance period and the time of commencement of the insurance liability;
6.
insured value;
7.
insured amount;
8.
insurance premium and mode of payment;
9.
mode of payment of insurance indemnity or insurance money;
10.
responsibility for breach of contract and dispute settlement; and
11.
the day, month and year on which the contract is signed.
Article
19 An insurance applicant and an insurer may make other stipulations
on matters and items related to the insurance other than those particulars
of the insurance contract as provided in the preceding article.
Article
20 Within the validity period of an insurance contract, the applicant
and the insure may, upon agreement through negotiation, modify relevant
contents of the insurance contract. Where an insurance contract
is modified, the insurer shall mark notes or attach slip on the
original insurance policy or other insurance certificates, or the
applicant and the insurer shall make an agreement in writing on
such modifications.
Article
21 At the time of being aware of the occurrence of an insurance
accident the applicant, the insured or the beneficiary, shall timely
notify the insurer. An insured means a person whose property or
body is guaranteed by the insurance contract, and who enjoys the
right of claim over the insurance benefit. An applicant may be an
insured. A beneficiary means a person who enjoys the right of claim
over the insurance benefit as designated by insured or the applicant
in life insurance contract. An applicant or an insured may be a
beneficiary.
Article
22 At the time of requesting the insurer, in accordance with the
insurance contract, for indemnity or payment of the insurance benefit
after the occurrance of an insurance accident the applicant, the
insured or the beneficiary shall provide to the insurer the relevant
proofs and materials, as much as they can provide, so as to determine
the nature, cause and degree of loss of the accident. The insurer
who considers relevant proofs and materials as incomplete according
to the stipulations of the insurance contract shall notify the applicant,
the insured or the beneficiary to submit additional relevant proofs
and materials.
Article
23 The insurer shall, after receiving claims for indemnity or payment
of insurance benefit from the insured or the beneficiary, timely
come to a decision, as for those within the insurance liability,
he shall execute the liability of indemnity or payment of the insurance
benefit within 10 days after reaching an agreement over the indemnity
or payment of the insurance benefit with the insured or the beneficiary.
If the insurance contract has the stipulations on insured amount
and the period for indemnity or payment, the insurer shall, as contracted,
execute the liability of indemnity or payment of the insurance benefit.
Apart from paying the insurance benefit, the insurer who fails timely
to execute the liability as provided in the preceding paragraph
shall indemnify the insured or the beneficiary for losses therefrom.
No unit or individual may illegally interfere the insurer from executing
the liability over indemnity or payment of the insurance benefit,
and may either restrict the rights of the insured or the beneficiary
in obtaining the insurance benefit. The insured amount means the
maximum measure of indemnity or payment of the insurance benefit
by the insurer.
Article
24 After an insurer receives the request made by an insured or a
beneficiary on indemnity or payment of the insurance benefit, as
for those not falling under the insurance liability, the insurer
shall issue a notice of refusal to indemnify or to make payment
of the insurance benefit to the insured or the beneficiary therefore.
Article
25 An insurer who fails to determine the amount of indemnity or
payment of the insurance benefit within 60 days from the date on
which the request for indemnity or payment of the insurance benefit
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 determining eventually the amount of indemnity
or payment of the insurance benefit, the insurer shall pay the corresponding
gap.
Article
26 The right of claim for indemnity or payment of the insurance
benefit of the insured or beneficiary of any other insurance other
than the life insurance shall, if not executed in two year from
the date of being aware of the occurrence of the insurance accident,
cease to exist. The right of claim for payment of the insurance
benefit of the insured or the beneficiary of life insurance shall
if not executed in five years from the date of being aware of the
occurrence of the insurance accident, cease to exist.
Article
27 If the insured or the beneficiary, under the circumstance that
no insurance accident happens, lies about the occurrence of the
accident and makes request for indemnity or payment of the insurance
benefit to the insurer, the insurer shall have the right to terminate
the insurance contract and will not return the insurance premium.
If the applicant, the insured or the beneficiary intentionally causes
an insurance accident, the insurer shall have the right to terminate
the insurance contract, will not bear the liability over indemnity
or payment of the insurance benefit, and will not return the insurance
premium with the exception of separate provisions in the first paragraph
of Article 64 of this Law. If the applicant, the insured or the
beneficiary, after the occurrence of an insurance accident, forges
or alters relevant proofs materials or other evidences so as to
provide false things account for the occurrence of the accident
or to overstate the losses, the insurer shall not bear the liability
over indemnity or payment of the insurance benefit for the part
falsified. The applicant, the insured or the beneficiary, who commits
one of the acts mentioned in the foregoing three paragraphs and
causes the insurer make payment of the insurance benefit or expenses,
shall return the payment or make compensation.
Article
28 When an insurer, in the form of underwriting, transfers partially
its insurance business it undertakes to other insurers, this is
called a reinsurance. At the request by a reinsurance acceptor,
the outward reinsurer shall notify the reinsurance acceptor the
relevant information on its self-born liability and the original
insurance.
Article
29 Reinsurance acceptors may not demand the applicants of the original
insurance to pay the insurance premium. The insured or the beneficiary
of the original insurance may not claim for indemnity or payment
of the insurance benefit form the reinsurance acceptor. The outward
reinsurer may not, at the excuse that the reinsurance acceptor fails
to execute the reinsurnce liability, refuse or delay in executing
the original insurance liability.
Article
30 When the insurer has disputes on the contents of an insurance
contract with the applicant, the insured or the beneficiary, the
people¡¯s court or arbitration organ shall make interpretation and
explanation favorable to the insured and the beneficiary.
Article
31 The insurer or reinsurance acceptors shall be liable to keep
under secret and confidential conditions the business and property
information of the applicants, the insured or the outward reinsurers,
which they get to know in carrying on the insurance business.
Section
2 Property Insurance Contract
Article
32 A property insurance contract means an insurance contract under
which the property and its related interest are the subject-matter
insured. Property insurance contract in this Section, unless especially
specified, is abbreviated as contract.
Article
33 The transfer of subject-matter insured shall be informed to the
insurer, and upon agreement to continue to underwrite by the insurer,
the contract shall be modified according to law. However, insurance
contracts of cargo transportation and contracts with otherwise stipulations
shall be excluded.
Article
34 After the commencement of the insurance liability of insurance
contracts of cargo transportation and voyage insurance contracts
of transport means, the parties to such contracts may not terminate
the contracts.
Article
35 The insured shall abide by the State¡¯s regulations relating to
the fire fighting, safety, production operation and labor protection,
so as to ensure the safety of the subject-matter insured. The insurer
may, as contracted, carry out inspection into the safety condition
of the subject-matter insured, and timely make written suggestions
on eliminating factors and hidden dangers to the applicant and the
insured. Where the applicant or the insured fails to execute this
due responsibility on the safety of the subject-matter insured as
contracted, the insurer shall have the right to demand for increase
in the insurance premium or to terminate the contract. For the purpose
of ensuring the safety for the subject-matter insured, the insurer
may, upon consent by the insured, take safety preventive measures.
Article
36 If, within the validity period of a contract, the degree of danger
of the subject-matter insured increases, the insured shall timely
notify the insurer as contracted, the insurer shall have the right
to demand for increase in the insurance premium or to terminate
the contract. Where the insured fails to execute the notification
responsibility provided in the preceding paragraph, and an insurance
accident thereby occurs due to the increase in the degree of danger
of the subject-matter insured, the insurer will not bear the liability
for indemnity.
Article
37 Under any of the following circumstances and unless the contract
has otherwise stipulations, the insurer shall lower the insurance
premium, and return the corresponding insurance premium calculated
on a daily basis: 1. relevant circumstances on which the determination
of insurance premium rate was based has undergone changes, and degree
of danger of the subject-matter insured has obviously reduced, or
2. insurable value of the subject-matter insured has obviously reduced.
Article
38 If an applicant requests to terminate the contract prior to the
commencement of an insurance liability, he shall pay a handling
fee to the insurer and the insurer shall return the insurance premium.
If an applicant request to terminate the contract after commencement
of an insurance liability, the insurer may charge the insurance
premium due from the date on which the insurance liability begins
to the date on which the contract is terminated, the remaining part
shall be returned to the applicant.
Article
39 Insurable value of a subject-matter insured may be determined
by the applicant and the insurer and be contained in the contract,
and also may be determined according to the actual value of the
subject-matter insured at the time that the insurance accident occurs.
The insured amount may not exceed the insurable value, if exceeding,
the part in excess shall be invalid. Where the insured amount is
lower than the insurable value, unless the contract has separate
stipulations, the insurer will bear the liability for indemnity
according to the percentage of the insured amount of the insurable
value.
Article
40 An Applicant of a double insurance shall notify each insurer
on relevant conditions of the double insurance. If the total insured
amount of a double insurance exceeds the insurable value, the total
amount of indemnity to be made by all insurers may not exceed the
insurable value. Unless the contract has otherwise stipulations,
each insurer will bear the liability for indemnity according to
the percentage of its insured amount to the total insured amount.
A double insurance means an insurance under which an applicant concludes
separate insurance contracts with two or more than two insurers
on the same subject-matter insured, the same insurable interest
and the same insurance accident. A double insurance means an insurance
under which an applicant concludes separate insurance contracts
with two or more than two insurers on the same subject-matter insured,
the same insurable interest and the same insurance accident.
Article
41 If an insurance accident occurs, the insured shall have the duty
to take necessary measures to prevent or minimize the losses. After
the occurrence of an insurance accident, the necessary and reasonable
expenses sustained by the insured in preventing or minimizing the
losses of the subject-matter insured shall be on the insurer¡¯s account,
the amount on the insurer¡¯s account shall be calculated separately
from the indemnity for the losses of the subject-matter insured,
the maximum amount may not exceed the insured amount.
Article
42 Where partial loss occurs to the subject-matter insured, the
applicant may terminate the contract within 30 days after the insurer
has made indemnity. Except otherwise provided for, the insurer may
also terminate the contract. The insurer who intends to terminate
the contract shall notify the applicant 15 days in advance, and
shall return the insurance premium on the undamaged part of the
subject-matter insured to the applicant after deducting the part
receivable for the period from the date of the commencement of insurance
liability to the date on which the contract is terminate.
Article
43 Where the insurer, after the occurrence of an insurance accident,
has made full payment of the insured amount, and the insured amount
is equal to the insurance value, all rights of the damaged subject-matter
insured shall belong to the insurer, if the insured amount is lower
than the insurance value, the insurer shall obtain the part of rights
of the damaged subject-matter insured according to the percentage
of the insured amount to the insurance value.
Article
44 If an insurance accident is caused by damage over the subject-matter
insured by a third party, the insurer will, from the date of making
payment of the insurance benefit to the insured, execute the right
of subrogation in claiming for indemnity over the said third party
within the limit of indemnity. Where the insured has obtained indemnity
from the third party for the loss after the occurrence of an insurance
accidents as provided in the preceding paragraph, the insurer may,
when making payment of the insurance benefit, deduct the amount
which the insured has already obtained from the third party. When
the insurer execute the right of subrogation for indemnity as provide
in the first paragraph, it does not affect the right of claim of
the insured against the third party for compensation on the part
which has not been compensated yet.
Article
45 If the insured, after the occurrence of an insurance accident
and before the insurer makes payment of the insurance benefit, waives
his rights of claim for indemnity against the third party, the insurer
will not bear the liability of indemnity for the insurance benefit.
If,
after the insurer has paid indemnities to the insured, the insured
forfeits the right to indemnities from the third party, 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
46 With the exception that family members or component persons of
the insured intentionally cause the insurance accidents provided
in Paragraph 1 of Article 44 of this Law, the insurer may not execute
the right of subrogation for indemnity to the family members or
component persons.
Article
47 When the insurer executes the right of subrogation against the
third party for indemnity, the insured shall provide necessary documents
and relevant information within its knowledge to the insurer.
Article
48 Necessary and reasonable expenses paid by the insurer and the
insured for the purpose of investigating and determining the nature
and cause of the insurance accident and the degree of losses of
the subject-matter insured shall be born by the insurer.
Article
49 If the insured of a liability insurance causes damage and loss
to a third party, the insurer may, in accordance with the provisions
of laws or the stipulations in the contract, directly make payment
of the insurance benefit to the third party. A liability insurance
means an insurance in which the liability for indemnity due of the
insured to the third party is the subject-matter insured.
Article
50 If the insured of a liability insurance is brought to arbitration
or legal proceedings due to an insurance accident in which damage
or loss is caused to a third party by the insured, unless the contract
contains otherwise stipulations, the insurer shall bear the arbitration
or court charges as well as other necessary and reasonable expenses
paid by the insured.
Section
3 Life Insurance Contract
Article
51 A life insurance contract is an insurance contract in which life
expectancy and human body serve as the subject-matter insured. Life
insurance contract, unless especially specified, is abbreviated
as contract in this Section.
Article
52 An insurance applicant has the insurable interest over the following
persons:
1.
the applicant himself;
2.his
spouse, children and parents, and
3.other
family members or near relatives, other than those listed in the
preceding item, with whom the applicant fosters, cares of or has
a support relationship.
Excluding
the provisions of the preceding paragraph, if the insured agrees
the applicant to conclude a contract for him, it shall be deemed
that the applicant has insurable interest over the insured.
Article
53 If the age of the insured declared by applicant is not true to
fact, and the actual age fails to be in conformity with the age
limit as agreed upon in the contract, the insurer may terminate
the contract, and return the insurance premium to the applicant
after deducting the handling fees, however, the contract which has
been served for more than two years into since its conclusion shall
be excluded. If the age of the insured declared by the applicant
is not true to fact, which hereby causes the applicant paying an
insurance premium less than the insurance premium payable, the insurer
shall have the right to correct it and demand the applicant to make
up the insurance premium, or pay the insurance benefit according
to the percentage of the actually paid insurance premium to the
insurance premium payable. If the age of the insured declared by
the applicant is not true to fact, which hereby causes the applicant
paying an insurance premium more than the insurance premium payable,
the insurer shall return the insurance premium collected in excess
to the applicant.
Article
54 An applicant may not effect a life insurance for persons without
civil capacity, in which death is the prerequisite for payment of
the insurance benefit, and the insurer may not accept it. Life insurance
effected by parents for their minor children shall not be restricted
by the provisions of the preceding paragraph, however, the total
amount of the insurance benefit paid at their death may not exceed
the limit stipulated by the financial supervision and control department.
Article
55 A contract in which death is the prerequisite for payment of
the insurance benefit, unless approved by the insured in writing
and agreed on the insured amount, shall be deemed as invalid and
void. An insurance policy issued according to a contract in which
death is the prerequisite for payment of the insurance benefit,
unless with written approval by the insured, may not be assigned
or mortgaged. Life insurance effect by parents for their minor children
shall not be limited by the provisions of the first paragraph.
Article
56 An applicant, after the contract is signed, may pay full insurance
premium in one installment to the insurer, and also may pay the
insurance premium in installments as contracted. Where a contract
stipulates the insurance premium to be paid in installments, the
applicant shall pay the initial payment of insurance premium at
the time the contract is entered into, and shall pay the insurance
premium for various remaining installments as scheduled.
Article
57 In case a contract stipulates the payment of the insurance premium
to be make in installments, after the applicant has paid the first
installments of the premium, but fails to pay the current installment
of the premium 60 days as scheduled, the force of the contract will
cease to exist, unless the contract contains otherwise stipulations,
or, the insurer shall reduce the insured amount according to the
terms stipulated in the contract.
Article
58 Upon agreement through negotiation by the insurer and the applicant
and after the applicant makes up the payment of the insurance premium,
the force of a contract which ceases according to the provisions
of the preceding paragraph, may be resumed. 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 less than two years, the
insurer shall return the premium paid after deducting the commissions.
Article
59 The insurer may not resort to legal proceedings to demand the
applicant to pay the insurance premium of life insurance.
Article
60 The beneficiary of life insurance shall be appointed by the insured
or the applicant. The applicant must be subject to approval by the
insured when appointing the beneficiary. If the insured is a person
without civil capacity or a person with limited civil capacity,
his guardian may appoint the beneficiary.
Article
61 An insured or an applicant may appoint one or several persons
as the beneficiary. If the beneficiary includes several persons,
the insured or the applicant may decide the order for benefit and
their shares of benefits if no share of the benefit is decided,
the beneficiaries shall have the equal amount of rights on benefit.
Article
62 An insured or an applicant may change the beneficiary and shall
notify the insurer in writing. The insurer shall, after receiving
the written notification on the change of beneficiary, mark it on
the insurance policy. An applicant must be subject to approval by
the insurer when changing the beneficiary.
Article
63 Under one of the following circumstances, the insurance benefit
shall be treated as the legacy of the insured who dies, and the
insurer shall execute its liability of payment of the insurance
benefit to the heir of the insured:
1.
without any person appointed as the beneficiary;
2.
The beneficiary dies earlier than the insured, and there is no other
beneficiary; and
3.
the beneficiary loses usufruct or waives the usufruct, and there
is no other beneficiary.
Article
64 If an applicant or a beneficiary intentionally causes the death
of, injury to, disability or disease of the insured, the insurer
will not bear the liability of payment of the insurance benefit.
If the applicant has already paid in full the insurance premium
for two years or more, the insurer shall, as contracted, return
the cash value of the insurance policy to other entitled beneficiary.
Any beneficiary, who intentionally causes the death of, injury to,
or disability of the insured, or attempts intentionally to murder
the insured, will lose his usufruct.
Article
65 Under a contract in which death is the prerequisite for payment
of the insurance benefit, if the insured commits suicide, with the
exception of those provided in Paragraph 2 of this Article, the
insurer will not be liable for payment of the insurance benefit,
as for the insurance premium already paid by the applicant, however,
the insurer shall, according to the insurance policy, return its
cash value. Under a contract in which death is the prerequisite
for payment of the insurance benefit and after two full years after
the contract was signed, if the insured commits suicide, the insurer
may, as contracted, pay the insurance benefit.
Article
66 If the insured intentionally commits crimes to cause injury to,
disability or death of himself, the insurer will not be liable for
the payment of the insurance benefit. If the applicant has already
paid in full the insurance premium for two years or more, insurer
shall, according to the insurance policy, return its cash value.
Article
67 If the insured of a life insurance sustains an insurance accident
as death, injury, disability or disease due to the harms done by
a third party, the insurer, after making the payment of insurance
benefit to the insured or the beneficiary, may not enjoy the right
of claims for compensation against the third party.
Article
68 If an applicant who has already paid in full the insurance premium
for two years or more terminates the contract, the insurer shall,
within 30 days after receiving the notification on termination of
the contract, return the cash value of the insurance policy; if
the applicant has not yet paid the insurance premium for two full
years, the insurer shall, after deducting the handling fees as contracted,
return the insurance premium.
Chapter
III Insurance Company
Article
69 An insurance company shall take any of the following organizational
forms:
1.
limited liability company, or
2.
solely State-owned company.
Article
70 The establishment of an insurance company must be subject to
approval by the financial supervision and control department.
Article
71 To establish an insurance company, the following requirements
shall be met:
1.
having an articles of association in conformity with the provisions
of this Law and the Company Law;
2.
having the minimum amount of registered capital as provided in this
Law;
3.
having qualified management personnel with professional knowledge
and working experiences qualified for their posts;
4.
having a well-found organizational structure and management system;
and
5.
having its business place and other relevant facilities up to the
requirements.
The
financial supervision and control department, when examining the
application for establishment, shall take into account the needs
of the insurance industry development and fair competition.
Article
72 The minimum amount of registered capital for setting up an insurance
company is 200 million Renminbi Yuan.
The
minimum amount of registered capital of an insurance company must
be the money capital actually contributed
The
financial supervision and control department may, in accordance
with the business scope and operation scale of an insurance company,
adjust the minimum amount of registered capital for the company,
the minimum amount, however, may not be lower than the amount provided
in the first paragraph.
Article
73 At the time of applying for the establishment of an insurance
company, the following documents and materials shall be submitted.
1.
a written application for establishment which shall contain the
designation, registered capital and business scope of the insurance
company intended to be established;
2.
a feasibility study report; and
3.
other documents and materials required by the financial supervision
and control department.
Article
74 If the applicant for the establishment of an insurance company
is found to meet the requirements through preliminary examination,
the applicant shall then carry out the preparation for the establishment
of the insurance company in accordance with the previsions of this
Law and the Company Law. For those which meet the requirements on
establishment provided in Article 71 of this Law, the formal application
form and the following documents and materials shall be submitted
to the financial supervision and control department:
1.
articles of association of the insurance company;
2.
name list of shareholders as well as their shares or contributors
as well as their contributions;
3.
letters of credit and relevant materials of those shareholders who
own more than 10 percent of registered capital;
4.
verification certificate issued by authorized capital verification
organizations;
5.
resumes and qualification certificates of senior management personnel
intended to be appointed;
6.
operation principle and plan;
7.
information on the business place and other facilities relevant
to its business; and
8.
other documents required by the financial supervisions and control
department.
Article
75 The financial supervision and control department shall, within
six months from the date on which the formal application documents
for the establishment of an insurance company are received, make
a decision to approve or disapprove it.
Article
76 An insurance company which are approved to be established shall
be issued a license for engaging in the insurance business by the
department of approval, and shall, on the strength of the aforesaid
license, complete registration with the administrative department
for industry and commerce, and obtain its business license
Article
77 If an insurance company, within six months from the date on which
the license for engaging in the insurance business is obtained,
fails to complete company registration without justified reasons,
its license for engaging in the insurance business shall cease to
be valid automatically.
Article
78 An insurance company shall, after its establishment, allocate
20 percent of its total capital as guarantee fund, and deposit it
in the bank designated by the financial supervision and control
department, such guarantee fund may not be used except to be used
to clear off debts when the insurance company is under liquidation.
Article
79 An insurance company must be subject to approval from the financial
supervision and control department in establishing branch organizations
within and outside the territory of the People¡¯s Republic of China,
and shall obtain licenses for engaging in insurance business for
these branches organizations.
The
branch organizations of an insurance company do not have the status
of legal entity, and their civil liability shall be born by the
insurance company.
Article
80 The establishment of representative offices by an insurance company
within and outside the territory of the People¡¯s Republic of China
must be subject to approval by the financial supervision and control
department.
Article
81 An insurance company shall get the approval of the financial
supervision and administration departments in one of the following
alterations:
1.
change of its designation;
2.
change in its registered capital;
3.
change of business places of the company or its branch organizations;
4.
adjustment of its business scope;
5.
split or merger of the company;
6.
revision of its articles of association;
7.
change of the contributors or shareholders who own more than 10
percent of the total shares; and
8.
other modifications stipulated by the financial supervision and
control department.
An
insurance company which intends to change its chairman of the board
or the general manager shall report to the financial supervision
and control department for examining his qualifications for the
position.
Article
82 The provisions of the Company Law shall apply to the organizational
structure of insurance companies.
Article
83 A solely state-owned insurance company sets up a board of supervisors
which shall be composed of representatives from the financial supervision
and control department, relevant experts and the insurance company¡¯s
persons, and carry out supervision over various reserve fund appropriated
by the solely State-owned insurance company, its minimum payment
capability and value increase and value maintenance of State-owned
property and assets as well as acts of the senior management personnel
committed in violation of laws, administrative regulations or the
articles of association and acts impairing the company¡¯s interests.
Article
84 An insurance company, due to its split, merger or the occurrence
of dissolution causes stipulated in the article of association and
upon the approval by the financial supervision and control department,
dissolves. The insurance company shall, according to law, form a
liquidation group to carry out liquidation.
Those
insurance companies engaged in the life insurance business may not
be dissolved except it split or merger.
Article
85 If the license for engaging in the insurance business of an insurance
company, due to its violation of laws and administrative regulation,
is revoked by the financial supervision and control department,
the said insurance company shall be dissolved according law. The
financial supervision and control department shall timely organize
a liquidation group to carry out liquidation.
Article
86 When an insurance company is unable to service its debts due,
it shall, with the consent of the financial supervision and control
department, be declared bankruptcy by a people¡¯s court according
to law. If an insurance company is declared bankruptcy, the people¡¯s
court shall organize a liquidation group composing of relevant departments
such as the financial supervision and control departments and relevant
personnel to carry out liquidation.
Article
87 If an insurance company engaged in the life insurance business
is dissolved or is declared bankruptcy according to law, the life
insurance contracts and reserve fund in its possession must be transferred
to other insurance companies engaged in the life insurance business;
in case of no transfer agreement with other insurance companies,
the financial supervision and control department shall appoint insurance
companies engaged in the life insurance business to accept them.
Article
88 If an insurance company goes bankrupt according to law, the bankrupt
property shall, after paying bankruptcy expenses in priority, be
distributed according to the following order:
1.
Wages and salaries to its employees in arrears and labor insurance
costs;
2.
indemnity or payment of the insurance benefit;
3.
tax in default; and
4.
to service the company s debts.
If
the bankrupt property is not sufficient to service the payment claims
in the same order, it shall be distributed according to a percentage.
Article
89 When an insurance company terminates its business operations
according to law, its license for engaging in the insurance business
shall be canceled.
Article
90 In absence of the provisions in this Law, the provisions of the
company Law, other relevant laws and administrative regulations
shall apply to the matters such as establishment, modification,
dissolution and liquidation of insurance companies.
Chapter
IV Operational Rules Governing Insurance
Article
91 Business scopes of insurance companies:
1.
property insurance business, including such insurance businesses
as insurance of property loss, liability insurance and credit insurance;
and
2.
life insurance business, including such insurance businesses as
life insurance, health insurance and accident insurance.
One
insurer may not engage in the property insurance business and life
insurance business concurrently.
The
business scope of an insurance company shall be approved by the
financial supervision and control department. The insurance companies
can only carry on insurance business activities within their business
scopes approved.
The
State Council shall formulate the measures on separation of business
operation as provided in the second paragraph for those insurance
companies which have been set up prior to the enforcement of this
law.
Article
92 Upon approval by the financial supervision and control department,
an insurance company may engage in the following reinsurance business
of those insurance businesses provided in the preceding article:
1.
outward insurance;
2.
inward insurance.
Article
93 The insurance companies engaged in insurance businesses other
than the life insurance business shall allocate undue liability
reserve fund from the retention insurance premiums of the current
year; the amount allocated and carried forward shall be equivalent
to 50 percent of the retention insurance premiums of the current
year.
Those
insurance companies engaged in the life insurance business shall
allocate undue liability reserve fund according to the total net
value of valid life insurance policies.
Article
94 Insurance companies shall allocate the outstanding loss reserve
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 the insurance accident already
happened.
Article
95 Apart from allocating reserve funds as provided in the preceding
two articles, insurance companies shall, in accordance with the
provisions of relevant laws, administrative regulations and the
state¡¯s financial accounting system, allocate the accumulated fund.
Article
96 In order to protect the insured persons?interests and support
their steady and healthy operations, insurance companies shall,
according to the regulations of the financial supervision and control
department, appropriate and deposit the insurance guarantee fund.
The
insurance guarantee fund shall be centrally controlled and used
in a unified manner.
Article
97 An insurance company shall possess the minimum indemnity and
payment ability which match its business scale. The balance of actual
assets after deducting actual debts of an insurance company may
not be lower than the amount stipulated by the financial supervision
and control department; if the balance is lower than the amount
stipulated, the insurance company shall increase its capital to
make up the gap.
Article
98 The retention insurance premiums of the current year for an insurance
company engaged in the property insurance business may not exceed
four times of its combined total of its actual capital and accumulated
fund.
Article
99 The liability for each risk unit of an insurance company, that
is, the liability for the maximum loss scope possibly to be caused
by each insurance accident, may not exceed 10 percent of the combined
total of its actual capital and accumulated fund, the part in excess,
if any, shall be effected a reinsurance.
Article
100 The calculation method on risk unit and plans on catastrophe
risk of insurance companies shall be reported to the financial supervision
and control department for approval.
Article
101 With the exception of the life insurance business, an insurance
company shall, in accordance with the state¡¯s relevant regulations,
effect a reinsurance for 20 percent of each insurance business it
accepts.
Article
102 Where an insurance company needs to offer outward insurance,
it shall give priority to insurance companies within the territory
of China.
Article
103 The financial supervision and control department has the authority
to restrict or forbid insurance companies to offer outward insurance
business to insurance companies outside the territory of China,
or to accept inward insurance business from outside the territory
of China.
Article
104 The use of fund of the insurance company must be moderate and
safe, follow the safety principle, and guarantee to increase and
maintain the value of its assets.
The
use of fund of the insurance company is restricted only to bank
deposit, trading of government bonds and financial bonds and other
forms of fund utilization stipulated by the State Council.
The
fund of the insurance company may not be used to set up securities
operation organizations or to invest in enterprises.
The
concrete proportion of fund used by the insurance company and the
capital for specific projects in its total capital shall be stipulated
by the financial supervision and control department.
Article
105 Insurance companies and their employees may not commit the following
acts during their insurance business activities:
1.
to cheat the applicant, the insured or the beneficiary;
2.
to conceal important information relevant to insurance contract
to applicant;
3.
to prevent the applicants from executing the truthfully-reporting
responsibility provided in this law, or induce them not to execute
the truthfully-reporting responsibility provided in this law; or
4.
to promise the applicants, the insured or the beneficiary to give
permits rebates or other interests beyond the stipulations of the
insurance contracts.
Chapter
V Supervision and Control over Insurance Business
Article
106 Basic insurance clauses and premium rates for major coverage
of commercial insurance shall be provided by the financial supervision
and control department.
The
insurance clauses and insurance rates of other categories of insurance
worked out by insurance companies shall be submitted for the record
to financial supervision and administration departments.
Article
107 Financial supervision and administration departments 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 accept supervision and inspection according to law.
Article
108 When an insurance company fails to appropriate or carry forward
various reserve funds according to the provisions of this Law, or
fails to effect reinsurance according to the provisions of this
Law, or seriously violates the provisions of this Law on these of
fund, the financial supervision and control department shall order
the said insurance company to take the following measures to remedy
within a set time limit:
1.
to appropriate or carry forward various reserve funds according
to law;
2.
to effect reinsurance according to law;
3.
to correct its acts of fund use committed in violation of law,;
and
4.
to change major person(s) in charge and relevant executive personnel.
Article
109 Subject to the provisions of the preceding article, if an insurance
company fails to make correction within the set time limit after
the financial supervision and control department has made the decision
for making corrections within a set time limit, the financial supervision
and control department shall decide to select professional persons
in the insurance business and to appoint relevant personnel from
the said insurance company to form a rectification group which will
carry out rectification on the said insurance company.
The
rectification decision shall contain and specify the designation
of the insurance company to be rectified, the cause for rectification,
rectification group and the rectification period, and shall be announced
and advertised.
Article
110 The rectification group, during the rectification process, has
the authority to supervise the said insurance company¡¯s daily affairs.
The persons in charge and relevant executive personnel of the said
insurance company shall perform their duties and powers under the
supervision of the rectification group.
Article
111 During the rectification process, the original businesses of
the insurance company may continue, however, the financial supervision
and control department has the authority to ban it from any new
business or to suspend part of its original business and to adjust
the use of fund.
Article
112 Where an insurance company under rectification has already corrected
its acts of violating this law and resumed its normal operation
ability, the rectification, after the submission of report by the
rectification group and upon approval by the financial supervision
and control department, shall cease.
Article
113 Where an insurance company violates the provisions of this Law
and harms the interests of social public, which might seriously
threaten or has already threatened its payment ability the financial
supervision and control department may implement a takeover of the
said company.
The
aim of such takeover is to adopt necessary measures for the company
taken over so as to protect the interests of the insured persons,
and restore the normal operation of the said insurance company.
The debts and credits of the insurance company taken over shall
not change due to such a takeover.
Article
114 The composition of the takeover group and the implementation
measures for takeover shall be made, announced and published by
the financial supervision and control department.
Article
115 When the term of takeover expires, the financial supervision
and control department may decide to extend the term, however, the
maximum term for takeover may not exceed two years.
Article
116 When term of takeover expires and the insurance company has
restored its normal operation ability, the financial supervisions
and control department may decide to terminate the takeover.
If
the takeover group believes that the assets of the insurance company
is no longer sufficient to clear its debts, upon approval by the
financial supervision and control department, it shall apply to
a people¡¯s court to declare bankruptcy of the said insurance company
according to law.
Article
117 An insurance company shall, within three month after the end
of each fiscal year, submit its business report, financial accounting
statement and relevant statements of the immediate previous year
to the financial supervision and control department, and make announcements
therefore according to law.
Article
118 An insurance company shall, before the end of each month, submit
its business statistics report of the immediate previous month to
the financial supervision and control department.
Article
119 Insurance companies engaged in the life insurance business must
appoint and employ professional actuary certified by the financial
supervision and control department, and establish an actuarial reporting
system.
Article
120 The insurer and the insured may invite independent assessment
organization established according to law or experts having statutory
qualifications to carry out assessment and appraisal on insurance
accidents.
Article
121 Insurance companies shall properly keep complete account books,
originally vouchers and certificates as well as relevant materials
about their business operation activities.
The
keeping period of account books, original vouchers and certificates
as well as relevant materials provided in the preceding paragraph
may not be shorter than 10 years, calculating from the date which
the insurance contracts ended.
Chapter
VI Insurance Agent and Insurance Broker
Article
122 An insurance agent means an unit or individual that, according
to the commission by the insurer, collects commission fees from
the insurer and handles the insurance business on behalf of the
insurer within the domain of commission.
Article
123 An insurance broker means an unit which, for purpose of the
interests of an insurance applicant, provides intermediary service
of the applicant and the insurer to conclude an insurance contract
and collects brokerage commission according to law.
Article
124 The insurer shall assume the liability for the acts of insurance
agents in handling the insurance business on behalf of the insurer
according to the authorization.
An
insurance agent engaging in agency business of life insurance may
not accept commission from two or more then two insurers concurrently.
Article
125 Where a loss, due to the mistake of the insurance broker, is
caused to the applicant or the insured, the insurance broker shall
bear the liability to indemnify therefore.
Article
126 Insurance agents and insurance brokers, when handling insurance
businesses, may not take the advantage of their administrative power,
positions or occupation as well as other unfair means to force,
induce or restrict insurance applicants in concluding insurance
contracts.
Article
127 Insurance agents and insurance brokers shall meet the qualification
requirements set up by the financial supervision and control department,
obtain the license for engaging in the insurance agency business
or the license for engaging in the insurance brokerage business
issued by the financial supervision and control department, complete
registration with the administrative department for industry and
commerce, obtain their business licenses, and pay the guarantee
money or buy a professional liability insurance.
Article
128 Insurance agents and insurance brokers shall have their own
business places, set up special books to record the collection and
payment conditions of insurance agency business or brokerage business,
and accept supervision by the financial supervision and control
department.
Article
129 An insurance company shall set up a registration book of its
insurance agents.
Article
130 The provisions of Articles 105, 107 and 117 of this Law shall
apply to insurance agents and insurance brokers.
Chapter
VII Legal Responsibility
Article
131 Where an insurance applicant, an insured or a beneficiary commits
one of the following acts, carries out activities of insurance deceit,
and constitutes a criminal responsibility shall be investigated
according to law:
1.
the applicant intentionally falsifies the subject-matter insured
so as to cheat for the insurance benefit;
2.
falsifying the occurrence of an insurance accident which has not
occurred so as to cheat for the insurance benefit;
3.
intentionally to cause an insurance accident with losses afflict
on property so as to cheat for the insurance benefit;
4.
intentionally to cause a life insurance accident such as the death,
injury, disability or disease of the insured so as to cheat for
the insurance benefit; or
5.
forging or altering proof, materials or other evidences relating
to the insurance accident, or instigation inducing or paying other
to provide false proof, materials or other evidences, fabricating
false cause, or exaggerating degree of losses so as to cheat for
the insurance benefit.
whoever
commits one of the acts listed in the preceding paragraph, if the
circumstance is of minor nature and does not constitute a crime,
shall be given an administrative penalty according to relevant regulations
of the state.
Article
132 Where an insurance company and its employee(s), during insurance
business activities, conceal important information relating to the
insurance contract, cheat the applicant, the insured or the beneficiary,
or refuse to execute the liability of indemnity or payment of the
insurance benefit as contracted, which constitutes a crime, criminal
responsibility shall be investigated according to law. If no crime
is constituted, the financial supervision and control department
shall impose a fine of from 10,000 Yuan to 50,000 Yuan on the said
company, and give a penalty on the employee(s) who violates the
law and impose a fine of less than 10,000 Yuan concurrently.
where
an insurance company and its employee(s) hinder the applicant from
executing the truthfully-reporting responsibility, or induce the
applicant into not executing the truthfully-reporting responsibility,
or promise the applicant, the insured or the beneficiary of offering
illegal insurance premium rebate or other interests, the financial
supervision and control department shall order them to correct,
and impose a fine of from 10,000 Yuan to 50,000 Yuan on the said
company, and give a penalty on the employee(s) who violates the
law and impose thereon a fine of less than 10,000 Yuan concurrently.
Article
133 Where an insurance agent or an insurance broker cheats the applicant,
the insured or the beneficiary during business activities, the financial
supervision and control department shall order it to correct., and
impose thereon a fine of from 10,000 Yuan to 50,000 Yuan concurrently,
if the case is serious, the financial supervision and control department
shall revoke its license for engaging in the insurance agency business
or its license for engaging in the insurance brokerage business.
If a crime is constituted, criminal responsibility shall be investigated
according to law.
Article
134 Where any employee of insurance companies takes the advantage
of his post, intentionally fabricates an insurance accident not
occurred and makes false indemnity so as to cheat for the insurance
benefit, criminal responsibility shall be investigated according
to law.
Article
135 Whoever, in violation of the provisions of this Law and without
approval, establishes an insurance company or engages in illegally
commercial insurance business activities, shall be investigated
for criminal responsibility according to law, and the financial
supervision and control department shall annul it. If these is of
a minor nature and no crime is constituted, administrative penalty
shall be given therefore.
Article
136 Whoever, in violation of the provisions of this Law, engages
in the insurance business beyond the approved business scope, shall
be ordered by the financial supervision and control department to
correct and to return the insurance premium already collected, and
shall be confiscated its illegal gains if there is such gains, and
imposed thereon a fine equivalent to more than one times and less
than five time of the illegal gains concurrently, if there is no
illegal gains, imposed thereon a fine of from 100,000 Yuan to 500,000
Yuan, and if it fails to make correction beyond the set time limit
or serious result is caused, shall be ordered to suspend its business
for rectification or revoked its license for engaging in the insurance
business.
Article
137 Where an insurance company, in violation of the provisions of
this Law, changes without approval such matters and items as the
company¡¯s designation, articles of association, registered capital
or business place of the company or its branch organization, the
financial supervision and control department shall order it to make
correct and impose thereon a fine of from 10,000 Yuan to 100,000
Yuan concurrently.
Article
138 Where an insurance company, in violation of the provisions of
this law, commits one of the following acts, the financial supervision
and control department shall order it to make correction and impose
thereon a fine of from 50,000 Yuan to 300,000 Yuan concurrently,
and if the case is serious, the department may restrict the company¡¯s
business scope and order it to suspend to accept new businesses
or revoke its license for engaging in the insurance business:
1.
failing to allocate guarantee fund according to regulations or using,
in violation of regulations, the guarantee fund;
2.
failing to allocate or carry forward undue liability reserve fund
according to regulations or failing to allocate outstanding loss
reserve according to regulations;
3.
failing to allocate insurance guarantee fund and accumulated fund
according to regulations;
4.
failing to carry out outward reinsurance business according to regulations;
5.
using capital of the insurance company in violation of regulations;
6.
setting up branch organizations or representative offices without
approval; or
7.
splitting or merging without approval.
Article
139 Where an insurance company, in violation of the provisions of
this law, commits one of the following acts, the financial supervision
and control department shall order it to make correction, and if
failing to make correction within the set time limit, impose a fine
of from 10,000 Yuan to 100,000 Yuan:
1.
failing to submit, as required, relevant reports, statements, documents
and materials or
2.
failing to submit, as required, the insurance clauses and insurance
premium rate for the planned insurance coverage for the record.
Article
140 Whoever, in violation of the provisions of this law, commits
one of the following acts, shall be ordered by the finanical supervision
and control department to make correction, and imposed a fine of
from 100,000 Yuan to 500,000 Yuan:
1.providing
false reports, statements, documents or materials; or
2.
refusing or hindering inspection and supervision carried out according
to law.
Article
141 Whoever, in violation of the provisions of this Law, commits
one of the following acts, shall be ordered by the financial supervision
and control department to made correction, and imposed a fine of
from 50,000 Yuan to 300,000 Yuan:
1.
over insurance and the case is serious; or
2.
accepting an insurance under which death is the prerequisite of
payment of the insurance benefit for a person without civil capacity.
Article
142 Whoever, in violation of the provisions of this Law, illegally
engages in insurance agency business or insurance brokerage business
without obtaining a license for engaging in the insurance agency
business or a license for engaging in the insurance brokerage business,
shall be annulled by the financial supervision and control department,
confiscated its illegal gains, and imposed a fine equivalent to
more than five times and less than 10 times of its illegal gains.
If a crime is constituted, criminal responsibility shall be investigated
according to law.
Article
143 With respect to the insurance company¡¯s senior executive personnel
held directly responsible for and other persons held directly responsible
for the act which was committed in violation of the provisions of
this Law but does not constitute a crime, the financial supervision
and control department may, according to the specific circumstances,
give warning order a replacement and impose a fine of from 5,000
Yuan to 30,000 Yuan.
Article
144 Whoever, in violation of the provisions of this Law, causes
damage or loss to others, shall bear civil responsibility according
law.
Article
145 Whoever approves the application for establishment of an insurance
company which fails to meet the requirements on establishment provided
in this Law or approves the application insurance agent or insurance
broker which fails to meet the requirements on agency or brokerage,
shall be given an administrative penalty, if the case is serious
and a crime is constituted, criminal responsibility shall be investigated
according to law.
Article
146 If any person of the financial supervision and control department,
in exercising supervision and control over the insurance business,
abuses his duty and power, practices favoritism for personal gains
or neglects his duty of office which constitutes a crime, criminal
responsibility shall be investigated according to law, if no crime
is constituted, administrative penalty shall be given thereto.
Chapter
VIII Supplementary Provisions
Article
147 The relevant provisions of the Maritime Law shall apply to marine
insurance, and in absence of the provisions in the Maritime Law,
the relevant provisions of this Law shall apply.
Article
148 The provisions of this Law shall apply to the establishment
of insurance companies with foreign investment, or branch companies
of foreign insurance companies within the territory of China, where
laws and administrative regulations have separate provisions, such
provisions shall apply.
Article
149 The state supports to develop the insurance business which serves
agricultural production. Agricultural insurance shall be provided
separately by laws and administrative regulations.
Article
150 Laws and administrative regulations shall separately provide
on insurance organizations of other natures other than those insurance
companies provided by this Law.
Article
151 Those insurance companies which, in accordance with the regulations
of the State Council, were approved to be established prior to the
enforcement of this Law, shall continue to remain. Among them, those
which fail to meet completely the requirements provided by this
Law shall make to met such requirements within a set time limit.
The State Council shall formulate the concrete measures thereon.
Article
152 This Law shall enter into force on October 1, 1995.
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