Detailed Rules for the Implementation of the Regulation of the People's Republic of China on the Administration of Foreign-Funded Insurance Companies

• Area of Law： Insurance
• Level of Authority： Departmental Rules
• Date issued：02-13-2018
• Effective Date：02-13-2018
• Status： Effective
• Issuing Authority： China Insurance Regulatory Commission

Detailed Rules for the Implementation of the Regulation of the People's Republic of China on the Administration of Foreign-Funded Insurance Companies
(Issued on May 13, 2004, by Order No. 4 [2004] of the China Insurance Regulatory Commission, amended for the first time in accordance with the Decision of China Insurance Regulatory Commission on Amending Some Rules by Order No. 10 [2010] of the China Insurance Regulatory Commission on December 3, 2010, and amended for the second time in accordance with the Decision of the China Insurance Regulatory Commission to Amend Four Sets of Rules Including the Detailed Rules for the Implementation of the Regulation of the People's Republic of China on the Administration of Foreign-Funded Insurance Companies by Order No. 4 [2018] of the China Insurance Regulatory Commission on February 13, 2018)
Article 1 These Detailed Rules are developed in accordance with the Insurance Law of the People's Republic of China and the Regulation of the People's Republic of China on the Administration of Foreign-Funded Insurance Companies (hereinafter referred to as the “Regulation”).
Article 2 The “foreign insurance companies” in the Regulation means insurance companies registered and engaging in the insurance business outside China.
Article 3 Where foreign insurance companies and Chinese companies or enterprises form insurance companies engaging in the personal insurance business within China in the form of equity joint ventures (hereinafter referred to as “EJV life insurance companies”), the foreign stake in such a joint venture shall not exceed 50% of the total shares of the joint venture.
The shares held directly or indirectly by foreign insurance companies in an EJV life insurance company shall not exceed the percentage limit in the preceding paragraph.
Article 4 Where the registered capital or working capital of a foreign-funded insurance company formed within China before the Regulation comes into force is less than 200 million yuan or an equivalent in freely convertible currencies, such deficit shall be made up within two years after these Detailed Rules come into force; and as long as such deficit is not made up, the China Insurance Regulatory Commission (hereinafter referred to as the “CIRC”) shall not approve the company's application for developing any new business.
Article 5 The registered capital or working capital of a foreign-funded insurance company shall be paid-in monetary capital.
Article 6 After the formation of a branch of a foreign insurance company, the foreign insurance company shall not withdraw in any way the working capital of the branch.
Article 7 The condition, “It has engaged in the insurance business for 30 years or more,” in Article 8 (1) of the Regulation means that a foreign insurance company has continuously engaged in the insurance business for 30 years or more and its merger of any other institution or the formation of a new insurance company after its consolidation with any other institution shall not affect the calculation of its length of engaging in the insurance business.
The length of engaging in the insurance business of a branch of a foreign insurance company shall be calculated from the date of formation of the branch.
Article 8 The “representative office” in Article 8 (2) of the Regulation means either of the following representative offices approved by the CIRC:
(1) A representative office formed by a foreign insurance company.
(2) A representative office formed by the group company to which a foreign insurance company is affiliated.
Article 9 A representative office formed by a foreign insurance company or the group company to which it is affiliated may be used for the formation of one foreign-funded insurance company only.
Article 10 The “end of the year before its application for the formation is filed” in Article 8 (3) of the Regulation means the end of the last fiscal year before the date of application.
Article 11 The “other prudential conditions” in Article 8 (7) of the Regulation shall, at a minimum, include the following conditions:
(1) A reasonable corporate governance structure.
(2) A sound risk management system.
(3) Adequate and effective internal control rules.
(4) Efficient management information systems.
(5) A good operating condition, without any record of major violations of laws and regulations.
Article 12 Where an applicant is unable to provide the business license (duplicate) as required in Article 9 (2) of the Regulation, it may provide a valid photocopy of the business license or a written certification from the competent authority to prove that the applicant is entitled to engage in the insurance business.
Article 13 The “certificate on its satisfaction of the solvency standard” issued by the competent authority of the country or region where the foreign applicant is located in Article 9 (2) of the Regulation shall include either of the following:
(1) In the last fiscal year before the date of issuance of the certificate by the competent authority, the solvency of the applicant satisfies the regulatory requirements of the country or region.
(2) In the last fiscal year before the date of issuance of the certificate by the competent authority, the applicant has no record of noncompliance with the solvency standards of the country or region.
Article 14 The “opinion on its application” issued by the competent authority of the country or region where the foreign applicant is located in Article 9 (2) of the Regulation shall include:
(1) whether the applicant's application for forming an insurance institution within China is in compliance with the laws of the country or region;
(2) whether it approves the application of the applicant; and
(3) any record of punishment of the applicant in the last three years before the date of issuance of the opinion by the competent authority.
Article 15 The “annual reports” in Article 9 (3) of the Regulation shall include the balance sheets, income statements, and cash flow statements of the applicant for the last three fiscal years before the date of application.
The sheets and statements in the preceding paragraph shall be accompanied with the audit opinions issued by an accounting firm or an audit firm recognized by the country or region where the applicant is located.
Article 16 Except as otherwise specified by any law or administrative regulation or approved by the State Council, the “Chinese applicant” in Article 9 (4) of the Regulation shall meet the following conditions:
(1) It is a company or enterprise, with the legal person status, registered with the administrative department for industry and commerce, excluding commercial banks, securities institutions, and wholly foreign-owned enterprises under the Wholly Foreign-Owned Enterprises Law of the People's Republic of China.
(2) Its application has been approved by the administrative authority in charge of the Chinese applicant or the shareholders' meeting of the Chinese applicant.
(3) It is in a good operating condition, and has earned profits in the last fiscal year before the date of application.
(4) It contributes capital with its own funds, the source of which is lawful.
Article 17 In the formation of an equity joint equity insurance company, the materials on the Chinese applicant required to be submitted shall include its business license (duplicate), company or enterprise bylaws, statement of business structure, history of operations, annual reports for the last three years, and records of any punishment received in the last three years.
Article 18 The persons in charge of the preparations for the formation of a foreign-funded insurance company shall meet the following conditions:
(1) Having a junior college diploma or higher.
(2) Having two or more years of insurance or relevant work experience.
(3) Having no record of any violation of law or criminal offence.
Article 19 Where an applicant applies for extending the period of formation preparations in accordance with Article 11 of the Regulation, it shall submit a written application to the CIRC within one month before the period of formation preparations expires, explaining the reasons for the extension.
Article 20 The “report on formation preparations” in Article 11 (1) of the Regulation shall contain an overview of the documents listed in all the other items of the article.
Article 21 The “statutory capital verification institution” in Article 11 (4) of the Regulation means an accounting firm which satisfies the requirements of the CIRC.
Article 22 The “certification of capital verification” in Article 11 (4) of the Regulation shall include:
(1) a capital verification report issued by a statutory capital verification institution; and
(2) a photocopy of the original receipt of the registered capital or working capital in the bank account.
Article 23 The “primary person in charge” in Article 11 (5) of the Regulation means the general manager of the branch of a foreign insurance company to be formed.
The power of attorney issued to the primary person in charge of the branch of a foreign insurance company to be formed means the power of attorney issued to the general manger of the branch of a foreign insurance company to be formed as signed by the chairman of the board of directors or the general manager of the foreign insurance company.
The power of attorney shall explicitly state the powers of the authorized person.
Article 24 The “senior executives of the company to be formed” in Article 11 (6) of the Regulation shall satisfy the office qualifications set out by the CIRC.
The senior executives of a branch of a foreign insurance company shall satisfy the office qualifications for the senior executives of the head office of an insurance company.
Article 25 The “materials on the business premises” of the company to be formed in Article 11 (9) of the Regulation means the certification documents on the ownership of or the right to use the business premises.
The “materials” on “other facilities related to the operations” in Article 11 (9) of the Regulation shall include, at a minimum, information on the allocation of computer equipment, the construction of computer networks, and the information management systems.
Article 26 The following documents or materials provided by a foreign insurance company that applies for the formation of a foreign-funded insurance company, as required by the Regulation and these Detailed Rules, shall be authentic and valid:
(1) Its business license (duplicate) or a valid photocopy of its business license.
(2) The power of attorney issued to the proposed primary person in charge of a branch of the foreign insurance company.
(3) A written statement from the foreign insurance company on its assumption of responsibility for the taxes and debts of its branch within China.
Article 27 A foreign-funded insurance company may, as needed for its business development, apply for the formation of branch offices.
A branch of a foreign insurance company may only conduct business within the administrative region of the province, autonomous region, or municipality directly under the Central Government where it is located. Where an equity joint equity insurance company or a wholly foreign-owned insurance company intends to conduct business in a province, autonomous region, or municipality directly under the Central Government other than the one where it is domiciled, it shall form a branch to do so.
A foreign-funded insurance company may, according to the actual circumstances, apply for forming a central sub-branch, a sub-branch, a business department, or a marketing service department. Where the rules of the CIRC provide otherwise for the formation and administration of marketing service departments, such provisions shall prevail.
Article 28 Where an equity joint venture insurance company or a wholly foreign-owned insurance company is formed with the minimum registered capital of 200 million yuan, it shall increase its registered capital by not less than 20 million yuan for its first application for forming a branch in each province, autonomous region, or municipality directly under the Central Government other than the one where it is domiciled.
When an application for forming a branch is filed, if the registered capital of the equity joint venture insurance company or wholly foreign-owned insurance company has reached an amount including the increase required in the preceding paragraph, the registered capital need not be increased.
For an equity joint venture insurance company or a wholly foreign-owned insurance company with its registered capital reaching 500 million yuan, it need not increase its registered capital in the formation of a branch if its solvency is sufficient.
Article 29 A foreign-funded insurance company shall meet the following conditions when applying for establishing a branch office:
(1) It remains solvent in the last year and for two consecutive quarters before application;
(2) It has a good corporate governance structure and a sound internal control system;
(3) It has sound management rules for branch offices;
(4) It has fully studied the feasibility of forming a branch office;
(5) If the branch office is not a provincial branch company and is to be set up in a province, autonomous region or municipality directly under the Central Government other than the place of domicile of the insurance company, the provincial branch company at that place shall have already started business;
(6) It has no record of any serious administrative penalty given by the financial regulatory body in the last two years, and it is not under investigation by the CIRC for being suspected of involvement in any serious violation;
(7) If the branch office to be set up is not a provincial branch company, the provincial branch company at the province, autonomous region or municipality directly under the Central Government where the branch office is to be located has no record of any serious administrative penalty given by the financial regulatory body in the last two years, and none of the other branch offices at that place has record of any serious insurance administrative penalty during the last six months;
(8) The person in charge of the formation preparation has been approved by the applicant; and
(9) other conditions as set out by the CIRC.
Article 30 To set up a branch office, the applicant shall submit the following materials in triplicate:
(1) An application form;
(2) Solvency reports of the two consecutive quarters before application and the solvency report of the last year which has been audited;
(3) The corporate governance report of the insurance company in the last year and the internal control system of the applicant;
(4) A feasibility report on the formation of the branch office, including a three-year planning, a market analysis of the development of the branch office, and an explanation of why setting up the branch office meets the risk management situation and internal control situation of the company;
(5) The branch office management rules of the applicant;
(6) A statement made by the applicant that it has no record of any serious administrative penalty given by the financial regulatory body during the last two years;
(7) If the branch office to be set up is not a provincial branch company, a statement that the provincial branch company has no record of any serious administrative penalty given by the financial regulatory body during the last two years;
(8) The resume and certificates of the person in charge of the formation preparation of the branch office; and
(9) Other materials as set out by the CIRC.
Article 31 The CIRC shall examine the application materials within 30 days after receiving a complete set of application materials. If the applicant fails to meet the conditions as specified in Article 29 of these Provisions, it shall make a decision of disapproval and give a justification in writing; if it meets the conditions as specified in Article 29 of these Provisions, it shall send a formation preparation notice to the applicant.
The applicant shall complete the formation preparation of the branch within 6 months after receiving the formation preparation notice. The preparatory period shall not be counted in the approved time limit.
If the preparatory work is not completed during the preparatory period, a formation application shall be made anew according to these Provisions.
The preparatory institution shall not engage in any insurance business during the preparatory period.
Article 32 If the formation preparatory institution meets the following conditions after the preparatory work is done, the applicant may submit a report for business-starting inspection to the CIRC:
(1)Having a legal business office, and having safety and firefighting facilities which meet the prescribed requirements;
(2)Having established the required institutional framework and good management rules for business operations, accounting affairs, regulation compliance, risk control, assets management, anti-money laundering, etc.;
(3)Having an information system required by its operation and management;
(4)Having the senior managers or a chief person-in-charge who meets the prescribed eligibility requirements;
(5)Having provided pre-job training to employees;
(6)Having not operated the insurance business during the formation preparatory period; and
(7)Other conditions as set out by the CIRC.
The report for business-starting inspection as submitted by the applicant shall be attached with the following materials in triplicate:
(1)A report on the completion of the preparatory work;
(2)The resume and certificates of the senior managers or the chief person-in-charge;
(3)A certificate on the ownership of, or the right to use, the business office of the branch office;
(4)A report on the availability of computers, the application system and the network building;
(5)The rules for business operations, accounting affairs, risk control, assets management, anti-money laundering, etc.;
(6)A report on the setup and employees of the branch office, including situations about the pre-job training of employees;
(7)A firefighting certificate as required by the provisions of the place where the branch office is to be located, or, if it is not required to submit a firefighting certificate for inspection or archival purposes, a written commitment that the applicant has taken necessary measures to maintain fire safety; and
(8)Other materials as set out by the CIRC.
Article 33 The CIRC shall, within 30 days after receiving the complete report for business-starting inspection, make a business-starting inspection and make a decision of approval or disapproval. If a decision of approval is made after it passes the inspection, the CIRC shall issue an insurance business operation permit for the branch offices; if a decision of disapproval is made after it fails to pass the inspection, the CIRC shall notify the applicant and give a justification in writing.
After a branch office of an insurance company is formed upon approval, it shall handle the registration formalities with the competent administrative department for industry and commerce upon the strength of the approval document and the insurance business operation permit for a branch office, and may not start business until it gets a business license.
Article 34 The examination and management of the satisfaction of office qualifications for the senior executives of a foreign-funded insurance company and its branch offices shall be governed by the relevant rules of the CIRC, except as otherwise specified in these Detailed Rules.
Article 35 Where an equity joint venture or wholly foreign-owned property insurance company applies for dissolution as a result of division, merger, or appearance of any cause of dissolution as set out in the company bylaws, it shall be subject to the approval of the CIRC, and the following documents shall be submitted in triplicate:
(1) A written application signed by the chairman of the board of directors of the company.
(2) A resolution of the shareholders' meeting of the company.
(3) The composition of the liquidation group to be formed and a liquidation plan.
(4) A plan for dealing with outstanding liabilities.
Article 36 An equity joint venture or wholly foreign-owned property insurance company which is dissolved with the approval of the CIRC shall cease conducting any new transactions from the date of receipt of the approval document of the CIRC, surrender its permit for engaging in the insurance business to the CIRC, and form a liquidation group within 15 days.
Article 37 The liquidation group shall, within five days of its formation, notify in writing the industry and commerce, taxation, labor and social security, and other relevant administrative departments of the commencement of liquidation procedures for the company.
Article 38 The liquidation group shall, within one month of its formation, engage an accounting firm satisfying the requirements of the CIRC to conduct audit; and submit an audit report to the CIRC within three months of the engagement.
Article 39 The liquidation group shall, before the tenth day of each month, submit to the CIRC a report on the latest repayment of debts and disposition of assets, among others.
Article 40 The “newspapers” in Article 28 of the Regulation means newspapers designated by the CIRC.
Article 41 Where a foreign property insurance company applies for removing its branch within China, it shall be subject to the approval of the CIRC, and the following materials shall be submitted:
(1) A written application signed by the chairman of the board of directors or the general manager of the foreign property insurance company.
(2) The composition of the liquidation group to be formed and a liquidation plan.
(3) A plan for dealing with outstanding liabilities.
The specific procedures for an equity joint venture or wholly foreign-owned property insurance company to apply for dissolution in the Regulation and these Detailed Rules shall apply to a foreign property insurance company's removal of its branch within China.
Where a foreign property insurance company is dissolved or is legally abolished or declared bankrupt, the liquidation and the disposition of debts of a branch of the foreign property insurance company shall be conducted according to the corresponding provisions of Article 30 of the Regulation and these Detailed Rules on the dissolution of an equity joint venture or wholly foreign-owned property insurance company.
Article 42 Where a foreign-funded insurance company violates the relevant provisions of these Detailed Rules, it shall be punished by the CIRC in accordance with the Insurance Law, the Regulation, and other laws and administrative regulations.
Article 43 The Chinese versions of the documents, materials, and written reports submitted under the Regulation and these Detailed Rules shall be provided, and if there is any discrepancy between the Chinese version and the version in a foreign language, the Chinese version shall prevail.
Article 44 A period prescribed in the Regulation and these Detailed Rules shall be calculated from the date of service of the relevant materials on the CIRC. Where the application materials of an applicant are incomplete and the applicant is required to submit supplements, the period shall be recalculated from the date of service of the applicant's supplements on the CIRC.
The approval or reporting periods prescribed in these Detailed Rules mean working days.
Article 45 Where the Regulation and these Detailed Rules are silent on the administration on foreign-funded insurance companies, other laws and administrative regulations and the relevant rules of the CIRC shall apply.
The formation of foreign-funded reinsurance companies shall be governed by the Provisions on the Formation of Reinsurance Companies, and where the Provisions on the Formation of Reinsurance Companies are silent, these Detailed Rules shall apply.
Article 46 The Regulation and these Detailed Rules shall apply, mutatis mutandis, to insurance companies formed in the Chinese mainland by insurance companies from the Hong Kong Special Administrative Region, the Macao Special Administrative Region, or the Taiwan region and operating in the Chinese mainland; and where any law, administrative regulation, or administrative agreement provides otherwise, such provisions shall prevail.
Article 47 These Detailed Rules shall come into force on June 15, 2004.