China Insurance Regulatory Commission, Insurance Brokerages Provisions

Promulgated: November 16 2001
Effective: January 1 2002
Interpreting authority: China Insurance Regulatory Commission (CIRC)
Applicability: The term "brokerage" for the purposes of the Provisions includes direct insurance broking and reinsurance broking (Article 3). The Provisions apply to the establishment of foreign-funded insurance brokerages unless laws, administrative regulations or international treaties provide otherwise (Article 81).

Main contents: If while engaged in insurance broking services an insurance brokerage injures an insurer or an insured person at fault, the insurance brokerage must bear legal liability (Article 7). An insurance brokerage can be a limited liability company or company limited by shares (Article 9). Registered capital must be at least Rmb10 million (Article 10).
The application process is divided into two parts: the first is for the forming of the insurance brokerage and the second is for the initiation of business (Article 15). Upon approval to form a brokerage, a working group is established to complete within six months the brokerage formation (Article 19). Once formation work is completed, the applicant may apply to the CIRC to initiate business (Article 20).
The CIRC specifies the geographical area of operation of a brokerage (Article 40).
After authorization by the CIRC, the insurance brokerage can engage in the following activities: basic client services; reinsurance services; disaster, damage and risk assessment; or risk management consulting services (Article 41).
The insurance brokerage should establish an independent account for client funds (Article 47). It should also establish a business guarantee fund equal to 15% of the registered capital or; alternatively, purchase professional liability insurance in accordance with the provisions of the CIRC (Article 53). Brokerages 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