Amending the Insurance Law: Long-Term Policy or Expedient Measures?

By Dr. Xu Guojian, Partner Bristar Cao, Associate & Richard L. Mertl, Legal Assistant, Boss & Young, Shanghai

From initial debate to final adoption, the amendment of the PRC Insurance Law  (中华人民共和国保险法) of the PRC was a major focus of public attention during the two years leading up to its final legislative approval on October 28 2002.

The original Insurance Law was initially adopted at the 14th Meeting of the Standing Committee of the Eighth National People's Congress on June 30 1995. In the seven years since then, however, great changes have taken place in the insurance industry, and have resulted in a drastically altered operating environment. There are now 53 insurance companies in the PRC compared to one in 1995, and the annual insurance premium income has risen from Rmb460 million in 1995 to Rmb226.3 billion through the first three quarters of this year alone. By the end of September 2002, the insurance industry had accumulated assets of almost Rmb600 billion, of which over Rmb500 billion were available for investment. With the increasing number of insurance consumers and products and continuous upgrading of insurance services and regulatory systems, a fairly robust insurance market has emerged in the space of only a few years.