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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II INSURANCE INSTITUTIONS Section 1 Establishment of Institutions Section 2 Changes of Institutions Section 3 Insurance License Section 4 Termination and Liquidation Section 5 Investments in Insurance Companies CHAPTER III INSURANCE BUSINESSES OPERATION CHAPTER IV TERMS OF INSURANCE AND PREMIUM RATES CHAPTER V INSURANCE FUNDS AND SOLVENCY OF INSURANCE COMPANIES CHAPTER VI SUPERVISION AND INSPECTION CHAPTER VII SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. For the purpose of strengthening the supervision and administration of the insurance companies, maintaining the normal order of the insurance market, protecting the lawful rights and interests of the insured and promoting the healthy development of the insurance industry, the present Provisions are formulated according to the Insurance Law of the People's Republic China (hereinafter referred to the Insurance Law), the Company Law of the People's Republic of China (hereinafter referred to the Company Law) and other relevant laws and regulations. Article 2. The China Insurance Regulatory Commission (hereinafter referred to the CIRC) shall carry out unified supervision and administration over the insurance companies according to law and the authorization of the State Council. The institutions designated by the CIRC shall perform the functions authorized by the CIRC. Article 3. The term "insurance companies" mentioned in the present Provisions refers to the commercial insurance companies established upon approval of the insurance regulatory institution and registered in accordance with the law. The term "branches of insurance companies" mentioned in the present Provisions refers to the business operation institutions and business service institutions lawfully established by the insurance companies, including their branch companies, central sub-branches, sub-branches, business departments and distribution and service departments. CHAPTER II INSURANCE INSTITUTIONS Section 1 Establishment of Institutions Article 4. The establishment of an insurance company shall be subject to the approval of the CIRC. Without approval of the CIRC, no entity or individual may engage in commercial insurance operations or do so in any disguised form within the People's Republic of China. Article 5. The following principles shall be observed in the establishment of an insurance company: (1) Abiding by the laws and administrative regulations; (2) In keeping with the macro-economic economic policies of the state and the development strategies of insurance industry; (3) Being conducive to the fair competition and healthy development of insurance industry. Article 6. The following conditions shall be met in the establishment of an insurance company: (1) Having qualified investors and a reasonable stock right structure; (2) The articles of association are in accord with the provisions of the Insurance Law and Company Law; (3) The minimum registered capital shall be RMB 200 million yuan, and the registered capital shall be actually contributed monetary capital; (4) The senior managerial personnel shall meet their position qualifications and conditions specified by the CIRC; (5) Having perfect organizational structure and management system; and (6) Having a business place and office equipment compatible with the development of its business. Article 7. When establishing an insurance company, the applicant shall file a written application to the CIRC and submit the following materials in triplicate: (1) The establishment application, which shall contain the name, registered capital and business scope of the to-be-established company; (2) The feasibility report, which shall contain the business development plan, draft articles of association and business management strategies; (3) The preparatory establishment plan; (4) The investors' shares subscription agreement, and the materials showing the approval of the board of directors or administrative organ for investment; (5) The business license of the investors or other background materials, the asset-liability statements and the profit-loss statements of the previous year upon audit by certified public accountants; (6) The name list and personal statements of the person-in-charge of the preparatory group acknowledged by the investors, the candidates for the chairman of the board of directors and the general manager; and (7) Other materials required by the CIRC. Article 8. The CIRC shall examine the application for the establishment of an insurance company, and shall make a decision on approval or disapproval of the preparatory establishment within 6 months as of the receipt of a complete set of application materials. If it makes a disapproval decision, it shall give a written notice to the applicant to explain. Article 9. During the period of examining the application for the establishment of an insurance company, the CIRC shall educate the investors about the risks of investments in the insurance industry. The CIRC shall listen to the candidate chairman of the board of directors and the general manager about their market development strategies, business development plan and construction of internal control system for the to-be-established company, and shall take these into consideration in deciding whether to approve or disapprove the preparatory establishment. Article 10. Where an applicant is granted approval by the CIRC to make the preparatory establishment of an insurance company, it shall complete the preparatory establishment work within 1 year. If it fails to complete the work within the time limit for justifiable reasons, the preparatory establishment period may extend 3 months upon approval of the CIRC. If it fails to complete the work within the extended time limit, the said approval documents of the CIRC regarding the preparatory establishment shall be invalidated automatically. The preparatory establishment institution shall not engage in any insurance business activities. In principle, no investor may be changed during the period of preparatory establishment. If any investor is changed without approval, the said approval documents regarding the preparatory establishment shall be invalidated automatically. Article 11. After the preparatory establishment work has been completed, the applicant shall file an application to the CIRC for starting business, and shall submit the following materials in triplicate: (1) The business-starting application; (2) The transcript of the initial meeting for the establishment; (3) The articles of association; (4) The name of the shareholders and their respective proportion of shares, the capital verification certification issued by a capital verification institution with good credit standing, the photocopies of the original documents for the capital deposited into the bank account; (5) The business licenses of the shareholders or other background materials, their asset-liability statements and the profit and loss statements of the previous year; (6) The resumes and relevant certification materials of the candidate senior managerial personnel of the company, an introduction of the setup of the company and personnel, the resumes of the actuaries and the pertinent certification materials; (7) The certification documents of the ownership and use right of the business places; (8) The 3-year business plan and reinsurance plan; (9) The plan on the insurance products; and (10) The report on the installation of computer equipment and the construction of network. Article 12. Within 60 days from the day when the CIRC receives the application documents for starting business, the CIRC shall make a decision of approval or disapproval. If it decides to approve, it shall issue a license for engagement in the insurance business to the applicant. If it decides to disapprove, it shall give a written notice to the applicant to explain. An insurance company approved to start business shall go through the registration formalities in the administrative department for industry and commerce upon the strength of the approval documents and the license for engagement in the insurance business. It shall not start business until it has obtained a business license. Article 13. An insurance company may apply for establishing branches in light of the needs of business development. When an insurance company carries out business in any province, autonomous region or municipality directly under the Central Government other than its registered place, it shall establish branches. It may, according to the actual circumstances, apply for establishing central sub-branches, sub-branches, business departments or distribution and service departments. With regard to the establishment and management of the distribution and service departments of insurance companies, if it is otherwise provided for by the CIRC, the latter shall be followed. Article 14. With regard to an insurance company that is established with the minimum registered capital specified in Article 6 (3) of the present Provisions, it shall increase its registered capital by not less than RMB 20 million yuan if it applies for establishing its first branch in every province, autonomous region, or municipality directly under the Central Government, other than its registered place. When applying for establishing a branch company, the insurance company isn't required to increase its registered capital accordingly if its registered capital has attained to the amount after increase specified in the preceding paragraph. If the registered capital of the insurance company attains to RMB 500 million yuan and the insurance company is fully solvent, the insurance company isn't required to increase its registered capital in the establishment of branches. Article 15. An insurance company shall meet the following conditions when applying for establishing a branch institution: (1) The amount of solvency meets the relevant requirements of the CIRC; (2) Having perfect internal control system, having no punishment record. If it has engaged in insurance business for more than 2 years, it shall have no punishment record within the recent 2 years; and (3) Having senior managerial personnel for the branch institution who meet the qualifications and conditions required by the CIRC. Article 16. When establishing a branch institution, the insurance company shall file an application to the CIRC and submit the following materials in triplicate: (1) An establishment application; (2) An un-audited report on the solvency by the end of the previous year and recent quarter; (3) A 3-year business development plan and market analyses for the to-be-established branch; and (4) The resume and relevant certification materials of the person to be in charge of the preparation of the to-be-established institution. Article 17. The CIRC shall examine the application for establishing a branch institution, and shall make a decision of approval or disapproval within 20 days as of the receipt of the complete set of application materials. If it decides to disapprove, it shall give a written notice to the applicant to explain. After the application has been approved, the applicant shall complete the preparatory establishment of the branch within 6 months. If it fails to do so within the time limit with justifiable reasons, the time limit may extend 3 months upon approval of the CIRC. If it fails to complete the preparatory establishment within the extended time limit, the said approval documents of the CIRC shall become null and void automatically. The preparatory institution shall not engage in any insurance business. Article 18. After having completed the preparatory establishment work of the branch institution, the applicant shall file an application to the CIRC for starting business, and shall submit the following materials in triplicate: (1) An business-starting application; (2) The report on the completion of the preparatory work; (3) The resume and relevant certifications of the candidate senior managerial personnel; and (4) The relevant certifications of the ownership or use right of the business place of the to-be-established branch institution, the installation of computer equipment and the construction of network, an introduction of the setup of internal institutions and the information of the practitioners. Article 19. The CIRC shall make a decision about approval or disapproval within 20 day as of the receipt of the complete set of business-starting application documents for the branch. If it decides to approve, shall issue the applicant a branch license for engagement in insurance business. If it decides to disapprove, it shall give a written notice to the applicant to explain. A branch of insurance company approved of starting business shall go through the registration formalities in the administrative department for industry and commerce upon the strength of the approval documents and branch license for engagement in insurance business. It shall not start business until it has obtained the business license. Article 20. The relevant provisions of the CIRC shall be applicable to the examination and management of the qualifications for the posts of the senior managerial personnel of the insurance companies. Article 21. When an insurance company establishes any representative office within China, it shall be subject to approval of the CIRC. No representative office may engage in any insurance business. Article 22. When an insurance company establishes any operating institution or representative office abroad, it shall be subject to approval of the CIRC. Section 2 Changes of Institutions Article 23. Before an insurance company changes any of the following items, it shall report to the CIRC for approval: (1) The organizational form; (2) The registered capital; (3) Division or merger; (4) The contributors or shareholders who hold 10 % or more of the company's shares; (5) Withdrawing any branch institution. Article 24. Before an insurance company changes any of the following items, it shall report to the CIRC for approval: (1) The company name; (2) The articles of association; (3) Adjusting the business scope; (4) The registered place. Article 25. Before an insurance company changes any of the following items, it shall report to the CIRC for approval: (1) The shareholders who hold less than 10 % of the company's shares, except that the insurance company is listed in any stock exchange; (2) A branch of the insurance company changes its business place. Article 26. Where an insurance company changes any of the following items, it shall submit a written report to the CIRC within 15 days from the day when it makes a change: (1) Any shareholder of the insurance company changes its name, except that the insurance company is listed in any stock exchange; (2) Any branch institution of the insurance company is merged or whose name is changed. Article 27. Where an insurance company withdraws any of its branches, it shall give explanations to the CIRC, and submit the subsequent handling plan on the business of the branch institution withdrawn. Where an insurance company merges or withdraws a branch institution, it shall make an announcement, and shall give a written notice to the insured or beneficiaries, shall let them have full knowledge of the payments for premiums and obtaining insurance money, etc. Where an insurance company withdraws a branch, the branch's insurance license shall be invalidated automatically as of the day when the company is granted an approval, and the branch insurance license shall be returned within 15 days. Article 28. Where an insurance institution modifies any information on the insurance license, it shall, upon the strength of the relevant documents and the insurance license, change its license in the issuing organ within 1 month from the day when it is approved, ratified, recorded or reported. Section 3 Insurance License Article 29. The term "insurance licenses" mentioned in the present Provisions refers to an insurance company's or any of its branch institution's license for engagement in insurance business. An insurance license is a legal document, which is issued by the CIRC according to law, allowing an insurance institution to engage in insurance business and proving the insurance institution' legitimate engagement in insurance business. Article 30. The CIRC shall be responsible for the design, printing, issuance, detaining, capturing, or canceling of the insurance licenses in accordance with the law. No insurance institution may forge, alter, lease, lend or transfer any insurance license. Article 31. An insurance institution shall put its insurance license in an eye-catching position of the business place for further examination. Article 32. In the event that its insurance license is missing, the insurance institution shall, within 10 days as of its knowledge, publish a statement of nullification on the newspapers designated by the CIRC, and simultaneously file an application to the original issuing organ for a new one. Section 4 Termination and Liquidation Article 33. Where an insurance company is to dissolve, a liquidating group shall be formed. The liquidation work shall be subject to the supervision and guidance of the CIRC. Where an insurance company is to be dissolved, the CIRC shall duly organize the shareholders, relevant departments and professionals to form a liquidating group. Where an insurance company is declared bankrupt according to law, the people's court shall organize a liquidating group. Article 34. Within 10 days as of the formation of a liquidating group, the creditors shall be informed of it; and within 60 days, an announcement shall be published in the newspapers designated by the CIRC for at least three times. The content of the announcement shall be subject to examination and approval of the CIRC. The liquidating group shall entrust certified accountant firms, actuary firms and law firms to assess the credits, debts and assets of the company. Article 35. The insurance company shall file an application with the CIRC for dissolution in accordance with the articles of incorporation or the decision of the assembly of shareholders, and submit the following documents in triplicate: (1) An application for dissolution; (2) The decision of the assembly of shareholders; (3) The organization of liquidation and its leader; (4) The liquidation procedure; (5) The plan dealing with credits and debts; (6) The plan on the distribution of assets and the plan on disposition of assets; and (7) Other materials required by the CIRC. Article 36. No sooner than an insurance company is dissolved or withdrawn according to law, it shall not accept any new business and shall return the insurance license. Article 37. Where an insurance company dissolves or is withdrawn according to law, its assets shall be disposed of by way of open auction, agreement-based transfer or by any other way acknowledged by the CIRC. Article 38. Where an insurance company is dissolved, is withdrawn or is declared bankrupt according to law, its plan on transfer of insurance contacts shall be subject to approval of the CIRC. Article 39. In the event of dissolution of any insurance company, the shareholders of the company shall not distribute the assets of the company or obtain any benefit from the company until the liquidation of the insurance-contract-related liabilities is completed. Article 40. If, in the process of liquidation, the insurance company being dissolved is found to be insolvent, an application shall be filed for bankruptcy claim, and the liquidation of assets and disposition of credits and debts shall be conducted by following the legal procedure for bankruptcy. Section 5 Investments in Insurance Companies Article 41. Legal person enterprises or other organizations permitted by any law or administrative regulation may invest in insurance companies. Article 42. A legal person enterprise that invests in an insurance company shall: (1) Be in conformity with the provisions of the laws and administrative regulations; (2) Ensure that the source of investment fund is legitimate, and the operating status is good; and (3) Meet other conditions provided for by the CIRC on the basis of the principle prudent supervision. Article 43. No individual legal person enterprise or other organization (including the associated parties thereof), except for an insurance holding company or insurance company approved by the CIRC, that invests in any insurance company may hold as much as 20% of the total shares of the insurance company. Article 44. An insurance company shall submit a written report on the connection among its shareholders, if any. Article 45. Upon approval of the CIRC, the foreign financial institutions meeting the conditions specified in Article 42 may invest in an insurance company. The shares held by all foreign shareholders shall be less than 25 % of the total shares of the insurance company. The relevant administrative provisions on foreign-funded insurance companies shall be applicable to an insurance company in which the shares held by all foreign shareholders are 25% or more of its total shares. Where foreign shareholders make investments into a listed insurance company, it isn't subject to the limits prescribed in the preceding paragraph. Article 46. An insurance company that is listed in any stock exchange by IPO within China shall observe the relevant limitations on investment ratios prescribed in Article 42 of the present Provisions. CHAPTER III INSURANCE BUSINESSES OPERATION Article 47. Upon examination and ratification of the CIRC, a property insurance company may engage in all or some of the following insurance businesses: (1) Insurance for loss of property; (2) Insurance for liabilities; (3) Insurance for statutory liabilities; (4) Credit insurance and guaranty insurance; (5) Agriculture insurance; (6) Insurance for other properties; (7) Short-term health insurance and accidental injury insurance; (8) Reinsurance businesses of the above-mentioned insurance businesses. Article 48. Upon examination and approval of the CIRC, a life insurance company may engage in all or some of the insurance businesses: (1) Accidental injury insurance; (2) Health insurance; (3) Traditional life insurance; (4) New products of life insurance; (5) Traditional annuity insurance; (6) New annuity insurance; (7) Other personal life insurance businesses; (8) Reinsurance businesses of the above-mentioned insurance businesses. Article 49. Where an insurance company applies for expanding its business scope, its registered capital and solvency shall meet the relevant requirements of the CIRC. Article 50. Where an insurance institution engages in foreign exchange insurance businesses, it shall observe the provisions of CIRC and the State Administration of Foreign Exchange on the management of foreign exchange insurance businesses. Article 51. Except for the circumstances specified in Article 52 of the present Provisions, the branches of an insurance institution shall not engage in insurance businesses beyond their respective province, autonomous region, or municipality directly under the Central Government. Article 52. Where an insurance institution participates in coinsurance, engages in a large-scale commercial insurance or insurance business in the form of blanket policy and undertakes insurance businesses of other provinces, autonomous regions, and municipalities directly under the Central Government, it shall observe the relevant requirements of the CIRC. Article 53. An insurance company shall, in accordance with the law, determine the self-retaining premium of an insurance business, and decide the self-retaining liabilities for any loss that may be caused by each unit of risk. As to the part exceeding the statutory limit, it shall be subject to reinsurance. Article 54. Where an insurance company needs to handle any outward reinsurance business, the outward reinsurance shall, under identical conditions, be given, as a preemptive, to the insurance companies within the territory of China. Article 55. No insurance institution may force, or force in a disguised form, the insured to purchase an insurance. Article 56. No insurance institution may entrust any illegal agent to expand business for it, accept any insurance business recommended by an illegal broker, or pay a service fee, commission or any other similar fee to an illegal agent or broker. Article 57. No insurance institution may fabricate or spread any false information to impair the credit standing of any other insurance institution. Article 58. No insurance institution may persuade or induce an insurant or the insured to cancel the contract concluded with other insurers. Article 59. An insurance company shall not make use of the government and the instrumentalities thereof, monopolistic enterprises or organizations to unlawfully squeeze out other insurance companies or impede the normal insurance business of other insurance companies. Article 60. No insurance institution may provide to an insurant, the insured, beneficiary or his interested parties any kickback of premium or other benefits or interests in violation of any law or regulation. Article 61. An insurance institution shall establish a special client service department or consultation and complaint department, and shall publicize its consultation and complaint telephone number. The insurance institution shall carefully address the complaints of insurants, the insured, beneficiaries, and shall duly inform the complainant of how to deal with it. Article 62. The publicity materials of the insurance company shall be objective, comprehensive, complete and authentic, which shall include its name, address and consultation & complaint telephone number. Article 63. The publicity materials of an insurance company shall not contain any prediction of the profits of the company, policy dividends, refund of margin and other uncertain policy-related benefits, etc. No insurance company may mislead the public in the aspects of the content of the insurance clauses and its service quality by advertisement or any other means. Article 64. In an insurance contract, an insurance institution shall have clear indication of the excluded liabilities or liability immunity, refund of premium and deduction of other expenses, cash value, hesitation period and other matters. The insurance institution shall not make ex parte comparison of the terms of insurance or premium rates with similar clauses or premium rates of other insurance companies or with the deposit rates of financial organizations. Article 65. An insurance company shall exercise supervision over the operations of its insurance agents. Any acts of the insurance agents in violation of the laws and regulations shall be stopped or corrected immediately upon discovery. In accordance with the law, the insurance institution shall bear the corresponding liabilities for the false statements, misleading information and other acts of the insurance agents for expanding business. Article 66. An insurance company shall make relevant bylaws to control and manage the connected transactions. Any important connected transaction shall, according to the relevant provisions, be reported to the CIRC within 15 days after it is completed. The term "connected transactions" mentioned in the preceding paragraph refer to the following transactions between the insurance companies and their connected parties: (1) Reinsurance business; (2) Asset management, guaranty and agent businesses; (3) Dealings of fixed assets or transfer of credits and debts. Under any of the following circumstances, it shall be deemed that there is a connection between an enterprise and an insurance company: (1) They are related to each other due to control of shares and capital contributions; (2) They are both controlled by a same third party in shares or capital contributions; or (3) They are directly controlled by the senior managerial personnel of an insurance company or by their close family members. The senior managerial personnel of an insurance company or their close family members shall be deemed to have a connection with the insurance company. Article 67. An insurance company shall establish and perfect its corporate governance structure, strengthen internal management, and establish strict internal control system. Article 68. An insurance company shall have obtained the supervisory opinion issued by the CIRC if it seeks to be listed. CHAPTER IV TERMS OF INSURANCE AND PREMIUM RATES Article 69. The insurance terms and premium rates employed by an insurance company shall, in accordance with the law, be reported to the CIRC for examination and approval. Article 70. The insurance terms and premium rates for any of the following insurance products shall be reported to the CIRC for examination and approval: (1) The mandatory insurance products according to law; (2) The newly developed life insurance products; (3) Other insurance products determined by the CIRC as relating to the interests of the general public. The catalog of insurance products subject to examination and approval shall be formulated and adjusted by the CIRC. Article 71. Besides the provisions of the preceding paragraph, the insurance terms and premium rates employed by an insurance company for other insurance products shall be reported to the CIRC for archival purposes. Article 72. When examining, approving or keeping record of the insurance terms and premium rates, the CIRC shall follow the principles of protecting the interests of the general public and avoiding unfair competition. The CIRC may require an insurance company to modify its insurance terms and premium rates as well as order the insurance company to stop using them under any of the following circumstances: (1) Violating any of the laws, administrative regulations or the prohibitive provisions of the CIRC; (2) Violating any of the relevant public finance and financial policies; (3) Impairing the interests of the general public; (4) The content is obviously unfair or forms price monopoly, thus the legitimate interests of insurance applicants, insurants or beneficiaries are impaired; (5) The design of terms or stipulations on premium rates or expected interest rate is inappropriate, which are likely to endanger the solvency of the insurance company; or (6) Other reasons determined by the CIRC on the basis of the principle of prudent supervision. Article 73. Where the insurance company is to modify the insurance terms and premium rates that have been approved or recorded, it shall file a new application for examination and approval or keeping the new record. When an insurance company concludes any specific insurance contract, it and the party concerned may enter into a supplementary agreement on some particulars, excluding the circumstances listed in Article 72 (1) through (6). Article 74. The long-term insurance terms, expected interest rate and other pricing factors determined by an insurance company shall be consistent with the relevant provisions of the CIRC. Article 75. An insurance company shall actively develop insurance products satisfying social demand, and try every effort to bring new products and services. The language of the insurance terms and premium rates used by an insurance company shall be simple, explicit and easy to understand. Article 76. The insurance industry association may issue model texts of property or personal insurance terms. The insurance industry association may, according to the actual circumstances, announce guiding premium rates. CHAPTER V INSURANCE FUNDS AND SOLVENCY OF INSURANCE COMPANIES Article 77. An insurance shall retain security deposit in accordance with the law. Except for using the security deposit to clear up the debts in the process of liquidation according to law, the insurance company shall not use or dispose of it without permission. Article 78. An insurance company shall establish an insurance security fund in pursuance of the law. The insurance security fund shall be subject to centralized management and planned use as a whole according to the relevant provisions of the CIRC. Article 79. An insurance company shall make reserves for various insurance liabilities according to the pertinent provisions of the CIRC. The reserves retained by the insurance company for various insurance liabilities shall be authentic and adequate. Article 80. The uses of insurance fund shall be limited to: (1) bank deposits; (2) dealings of government bonds; (3) dealings of financial bonds; (4) dealings of enterprise bonds; (5) dealings of securities investment fund; and (6) other forms provided by the State Council for using the fund. When an insurance company makes investments by using the insurance fund, it shall have the specific ways, rates of specific products and the lowest grade rating upon determination meet the relevant requirements of the CIRC. Article 81. When an insurance company uses any of its overseas funds, it shall comply with the relevant provisions of the state. Article 82. An insurance company may establish a insurance asset management company and may entrust an insurance asset management company to use the insurance fund. Article 83. An insurance company shall, under the principles of protecting the interests of the insurants and keeping the solvency, operate stably and soundly, and ensure that its actual amount of solvency be not lower than the minimum amount of solvency at any time. Article 84. The actual amount of solvency of an insurance company shall be the margin between the confirmed assets and the confirmed debts. The confirmation, computation and reporting of the assets and debts shall be in conformity with the relevant provisions of the CIRC. Article 85. The standard on the minimum amount of solvency of insurance companies shall be provided and adjusted by the CIRC. Article 86. Where the actual amount of solvency of an insurance company is less than the minimum amount of solvency, the insurance company shall take effective measures to improve its status of solvency, and shall report the rectification plan, specific measures and due effects to the CIRC. Article 87. The adequate solvency ratio of an insurance company shall be the quotient of the actual amount of solvency of the insurance company divided by the minimum amount of solvency. If the adequate solvency ratio is less than 100%, the CIRC shall list this insurance company as an important supervisory object, and shall take the following supervisory measures in light of the actual circumstances: (1) If the adequate solvency of the insurance company is 70% or more, the CIRC may demand the company to make a rectification proposal and to meet the requirements for the minimum amount of solvency within a time limit. If it fails to meet the requirements, the CIRC may take supervisory measures such as demanding the company to increase capital and ordering it to handle reinsurance and to impose limits on its business scope, distribution of dividends to shareholders, purchases of fixed assets, scale of operating expenses and establishment of branches, etc. till it meet the requirements for the minimum amount of solvency; (2) If the adequate solvency ratio is between 30% and 70%, the CIRC shall not only take the above-mentioned measures, it may also order the insurance company to auction its non-performing assets, to transfer its insurance businesses, to impose limits on the salaries of its senior managerial personnel and their work-related expenditure, to restrict the commercial advertisements of the company, to adjust the uses of fund and to stop engaging in new businesses; (3) If the adequate solvency ratio of the insurance company is less than 30%, the CIRC shall not only take the above-mentioned measures, but also may take over the insurance company in accordance with the law. CHAPTER VI SUPERVISION AND INSPECTION Article 88. When conducting supervision over the insurance companies, the CIRC shall abide by the principle of combining the supervision over solvency with the supervision over market activities. The insurance companies shall, in pursuance of the law, be subject to the supervision of the CIRC. Article 89. When conducting supervision over the insurance institutions, the CIRC shall adopt the way of combining on-site supervision with offsite supervision. Article 90. An insurance institution that is under any of the following circumstances shall be regarded by the CIRC as an important object for inspection: (1) Having violated the law or regulations seriously; (2) Being inadequately solvent; (3) Its financial status is abnormal; (4) Providing false reports, statements, documents and materials; or (5) Other matters that the CIRC considers that it is necessary to list it as an important object for inspection. Article 91. The on-site inspections conducted by the CIRC over an insurance institution shall include all or some of the following items: (1) Whether it has obtained approval for the establishment or modifications of the institution, and whether it has completed the formalities for record-keeping; (2) Whether the content of the application materials is in conformity with the actual circumstances; (3) Whether the capital and various reserve funds are authentic and adequate; (4) Whether the solvency is adequate; (5) Whether the uses of fund are lawful; (6) Whether the business operations and financial status are good, whether the statements are complete and authentic; (7) Whether it has reported the insurance terms and premium rates for examination and approval or for archival purposes according to relevant provisions; (8) Whether the businesses between it and insurance intermediaries are in line with the law and regulations; (9) Whether the formalities for the appointment or change of personnel are complete; (10) Where the required after-event reporting matters have been duly reported; (11) Other matters that the CIRC deems necessary for inspection. Article 92. When the CIRC conducts on-site inspections over an insurance institution, the insurance institution shall cooperate with it and shall provide relevant documents and materials demanded by the CIRC. Article 93. When the personnel of the CIRC conduct on-site inspections over an insurance institution, the number of inspectors shall not be less than 2, and they shall show their certificates and the inspection notice. When CIRC authorizes an accounting firm or any other social intermediary to inspect an insurance institution, it shall adopt the form of written authorization. Article 94. The insurance institutions shall timely submit business reports, actuarial reports, financial accounting statements, solvency reports and relevant supervisory statements to the CIRC according to the relevant provisions. Article 95. All statements and reports submitted by the insurance institutions to the CIRC shall be complete, authentic and accurate. Article 96. The business operation reports, financial accounting statements, solvency reports and other relevant statements of an insurance company shall be signed by the legal representative or general manager of the company. The annual financial accounting reports and solvency reports shall be subject to the audit by certified public accountants. The actuarial reports of the insurance company shall be signed by the actuaries acknowledged by the CIRC. The reports and statements of a branch of the insurance company shall be signed by the person-in-charge of the branch and be affixed with the seal of the branch. Article 97. Where the assembly of the shareholders or the board of directors of an insurance company makes any significant resolution, it shall report it to the CIRC within 30 days after the resolution is made. Article 98. While performing the supervisory functions, the CIRC may talk with or interrogate the senior managerial personnel of an insurance institution, demanding them to make explanations about the insurance business operations and the important matters relating to risk management. Article 99. Where an insurance company or any of its personnel violates the present Provisions, it (he) shall be given a warning by the CIRC, be ordered to get right and be given an administrative punishment according to the laws and administrative regulations. If suspected of constituting any crime, it (he) shall be transferred to the judicial organ for criminal liabilities. CHAPTER VII SUPPLEMENTARY PROVISIONS Article 100. The present Provisions shall be applicable to the foreign-funded insurance companies and reinsurance companies, however, if it is otherwise provided for by the laws, administrative regulations or the CIRC, the latter shall be followed. Article 101. The present Provisions shall be applicable to the export credit insurance companies and other policy insurance companies by analogy before the relevant provisions of state are issued. Article 102. All statements and materials submitted by the insurance institutions to the CIRC shall be written in Chinese. If the original text is in a foreign language, it shall be accompanied by a Chinese translation. If there is any discrepancy between the Chinese text and the text in a foreign language, the Chinese one shall prevail. Article 103. The relevant time limits in the provisions, except for those based on year or month, shall be calculated on the basis of working day, excluding legal holidays. Article 104. The power to interpret the present Provisions shall remain with the CIRC. Article 105. The present Provisions shall be implemented as of June 15, 2004. The Administrative Provisions on Insurance Companies (No. 2 (2000)) issued by the CIRC on January 3, 2000 and the Decision To Amend Some Articles in the Administrative Provisions on Insurance Companies (No. 3 (2002) issued by the CIRC on March 15, 2002 shall be abolished simultaneously. |
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