China Insurance Regulatory Commission, Questions Relevant to Large-scale Commercial Insurance Business and Master Policy Business Circular

Issued: February 21 2002
Effective: February 20 2002
Applicability: Large-scale commercial insurance means insurance for large-scale industrial or commercial enterprises (Item One). Master policy means an insurance policy that covers the geographically diversified properties or liabilities of the same legal person (Item Four). For the purposes of the Circular, "insurance companies" include wholly Chinese-owned insurance companies, Sino-foreign equity joint insurance companies, wholly foreign-owned insurance companies and Chinese branches of foreign insurance companies (Item 10).

Main contents: The Circular mainly defines the various types of insurance that may be provided to large-scale commercial enterprises. For this purpose, upon China's accession to WTO, an enterprise is deemed a large-scale commercial enterprise if it pays out over Rmb80,000 in insurance premiums and has Rmb200 million in investments. One year later, the criteria will be lowered to Rmb60,000 and Rmb180 million respectively; and two years later, the criteria will be further lowered to Rmb40,000 and Rmb150 million respectively. For such enterprises, insurance companies may provide insurance coverage by means of non-local insurance, co-insurance or master policies (Item One). Non-local insurance means provision of coverage on subject matter located outside the permitted business area of the insurer. Insurance companies may provide cargo transportation insurance by means of non-local insurance (Item Two). Co-insurance means insurance coverage for the same liability by two or more insurers under the same insurance contract. Co-insurers may enter into such co-insurance by forming a co-insurance group or entering into a co-insurance contract, but the formation of such co-insurance group shall be filed with the China Insurance Regulatory Commission (Item Three). In addition to large-scale commercial enterprises, an insurer may also use a master policy to cover a legal person who is headquartered or has over 50% of its insured liabilities located in the business area of the insurer (Item Four).
Repealed legislation: China Insurance Regulatory Commission, Administration of Co-insurance, Non-local insurance and Master Policy Businesses, Etc. Circular