China Insurance Regulatory Commission, Insurance Agencies Provisions

Promulgated: November 16 2001
Effective: January 1 2002
Interpreting authority: China Insurance Regulatory Commission (CIRC)
Applicability: The Provisions apply to the establishment of foreign-funded insurance agencies unless laws, administrative regulations or international treaties provide otherwise (Article 81). Where discrepancies arise between previous provisions on insurance agencies and the Provisions, the Provisions shall prevail (Article 84).

Main contents: Where an insurance agency is providing insurance services within the limits of the authority delegated to it by an insurer, the legal liability for any results rests with the insurer (Article 5).
An insurance agency can take the form of a partnership, a limited liability company or a company limited by shares (Article 7). Insurance agencies that take the form of partnerships must have an initial investment of at least Rmb500,000 and employ senior management personnel who conform to the qualification requirements of the CIRC (Article Eight). Limited liability companies must possess 2 to 49 shareholders, have a registered capital of at least Rmb500,000 and assure that at least half of the personnel are certified insurance agents (Article 9). A company limited by shares must have at least six sponsors, have a registered capital of at least Rmb10 million and assure that at least half of its personnel are certified insurance agents (Article 10).
The application process is divided into two parts; the first for the forming of the insurance agency and the second for the initiation of business (Article 15). The CIRC will accept or reject the submission of the application to form an agency within 30 days and will approve or deny the application within six months (Article 18). Upon approval to form an agency, a working group is established to complete within six months the agency formation (Article 19). Upon completion of the formation work, the applicant may apply to the CIRC to initiate business (Article 20). The CIRC must approve or reject the application within three months from the date of application (Article 21).
The CIRC sets the geographical area of operation of an agency (Article 40). Agencies must sign an agency agreement with the insurance company they represent (Article 44). Insurance companies may ask agencies to provide a guarantee fund, the amount and payment method of which is to be agreed upon by the two parties (Article 52). Agencies must establish a business guarantee fund of 5% of the registered capital or capital contribution or, alternatively, purchase professional liability insurance in accordance with the provisions of the CIRC (Article 53).
Agencies must submit an auditor's report to the CIRC within 60 days following the end of each accounting year (Article 56).
Related legislation: PRC, Insurance Law (Amended), Feb 28 2009, CLP 2009 No.3 p35