PRC Insurance Law (Revised)

Revised on April 24 2015. Latest revision can be found at: http://www.chinalawandpractice.com/Article/3455598/PRC-Insurance-Law-Revised-in-2015.html

(Promulgated on October 28 2002 and effective as of January 1 2003.)

PART ONE: GENERAL PROVISIONS

Article 1: This Law is formulated to regulate insurance activities, protect the lawful rights and interests of the parties to insurance activities, strengthen the supervision and administration over the insurance industry and promote the healthy development of the insurance business.

Article 2: The term "insurance" as used in this Law refers to a commercial insurance transaction involving a contractual agreement in which a proposer pays a certain premium to the insurer, and the insurer undertakes liability to pay indemnity as reimbursement for property loss arising from the occurrence of certain possible events stipulated in the contract, or undertakes payment of corresponding insurance benefits upon the occurrence of the death, disability or illness of the insured, or the attainment of a certain age or time limit stipulated in the contract.

Article 3: This Law shall apply to all insurance activities undertaken within the territory of the People's Republic of China.

Article 4: Parties undertaking insurance activities must obey the law and administrative regulations, defer to the norms of accepted social ethics, and abide by the principle of free will.

Article 5: In carrying out their obligations and exercising their rights, the parties to insurance activities shall abide by the principle of honesty and good faith.

Article 6: Only insurance companies that are established according to the stipulations of this Law shall be permitted to engage in commercial insurance business operations. No other entities or individuals shall be allowed to engage in commercial insurance business activities.

Article 7: Legal persons and other organizations taking out insurance within the territory of the People's Republic of China shall make their proposals for insurance coverage to insurance companies located within the People's Republic of China.

Article 8: When conducting insurance business, insurance companies shall abide by the principle of fair competition, fully refraining from engagement in any unfair competitive activities.

Article 9: The insurance supervision and administration department(s) of the State Council shall be responsible for implementing supervision and administration in accordance with this Law.

PART TWO: INSURANCE CONTRACTS

Section One: General Stipulations

Article 10: An insurance contract is an agreement in which a proposer and an insurer stipulate their respective obligations and rights in respect of an insurance transaction.

"Proposer" refers to the party that concludes an insurance contract with the insurer and undertakes the obligation to pay insurance premiums to the insurer.

"Insurer" refers to the insurance company that concludes an insurance contract with a proposer and undertakes the obligation to disburse insurance indemnity or benefits.

Article 11: In concluding an insurance contract, an insurer and a proposer shall mutually abide by the principles of fairness and mutual benefit, mutual agreement on all points at issue through negotiation and free will, and avoidance of harm to the public interest.

Except for instances mandated by law or administrative regulations, insurance companies or other organizations shall not coerce other parties to conclude insurance contracts.

Article 12: A proposer must have an insurable interest in the insured subject matter.

If a proposer has no insurable interest in the insured subject matter, the corresponding insurance contract shall be invalid.

"Insurable interest" means that the proposer holds a legally recognized interest in the insured subject matter.

"Insured subject matter" refers to property and the interests associated with such property or the life and health of a person taken as the subject of an insurance contract.

Article 13: An insurance contract is concluded when a proposer makes a request for insurance, the insurer agrees to underwrite the insurance and the terms and conditions of the contract are agreed upon. The insurer shall thence promptly issue a policy or other insurance certificate to the proposer, containing the contents of the contract as mutually agreed to by the parties.

Subject to consultation and agreement between the insurer and the proposer, other forms of written agreement may also be adopted to conclude an insurance contract.

Article 14: Once an insurance contract has been concluded the proposer shall pay insurance premiums according to the agreement, and the insurer shall undertake insurance liability according to the time schedule agreed to in the contract.

Article 15: Unless otherwise stipulated in this Law or the pertinent insurance contract itself, the proposer may rescind an insurance contract after it has been concluded.

Article 16: Unless otherwise stipulated in this Law or the pertinent insurance contract itself, the insurer shall not be permitted to rescind an insurance contract after it has been concluded.

Article 17: When concluding an insurance contract, the insurer shall make detailed explanation of the full contents of the contract to the proposer, and may also make relevant inquiries of the proposer regarding the insured subject matter or circumstances of the insured party, to which the proposer shall give truthful disclosure.

In the event that the proposer deliberately conceals facts or fails to carry out its duty of truthful disclosure, or negligently fails to execute its duty of truthful disclosure so as to materially influence and alter the insurer's decision as to whether or not to provide the corresponding insurance coverage or to raise the corresponding premium rate, then the insurer shall be permitted to rescind the corresponding insurance contract.

In the event that the proposer deliberately fails to carry out its duty of truthful disclosure, the insurer shall not be liable to indemnify or pay insurance benefits or refund the insurance premium collected for insured events occurring prior to the rescission of the contract.

In the event that the proposer negligently fails to execute its duty of truthful disclosure, and such negligence has significant relevant bearing on the occurrence of an insured event, the insurer shall not be liable to indemnify or pay insurance benefits for such insured events occurring prior to the rescission of the contract, but may refund previously collected insurance premiums.

"Insured event" refers to an accident within the scope of insurance liability specified in the insurance contract.

Article 18: In the process of concluding an insurance contract, the insurer shall specifically explain all exemptions of its liability to the proposer; if an item of exemption is not specifically explained, the clause of the contract stipulating the said exemption shall not carry validity.

Article 19: An insurance contract shall contain the following items:

1. Name and domicile of the insurer;

2. Names and domiciles of the proposer and the insured, as well as the name and domicile of the beneficiary of life insurance;

3. The insured subject matter;

4. Insurance liability and liability exemptions;

5. Term of coverage and beginning date of coverage;

6. Insurance value;

7. Insured amount;

8. Insurance premium and corresponding payment schedule;

9. Schedule for payment of indemnity or insurance benefits;

10. Liability for breach of contract and settlement of conflict; and

11. Date of conclusion of contract.

Article 20: In addition to the items listed in the previous article, the proposer and the insurer may agree to other additional terms pertinent to a particular insurance transaction.

Article 21: During the term of an insurance contract, the proposer and the insurer may amend the content of said contract pursuant to mutual consultation and agreement to such changes.

Amendment to an insurance agreement shall be evidenced by the insurer placing an annotation on the original policy or other insurance certificate, or by attaching an endorsement, or else by the conclusion of a separate written agreement between the insurer and the proposer.

Article 22: The proposer, the insured or the beneficiary shall notify the insurer as soon as they respectively become aware of the occurrence of an insured event.

"Insured" refers to a party whose property or physical body is safeguarded by an insurance policy, and who has the corresponding right to claim indemnity or insurance benefits. The proposer may also appear as the insured party of a given insurance policy.

"Beneficiary" refers to the party to a contract of insurance of the person designated by the proposer or the insured as being vested with the right to claim insurance benefits. The proposer or the insured may also appear as the beneficiary of a given insurance policy.

Article 23: Subsequent to the occurrence of an insured event, and when making a claim for indemnity or payment of benefits in accordance with the insurance contract, the proposer, the insured or the beneficiary shall provide, to the best of its ability, all proofs and information available pertinent to determining the nature, cause, degree of damage and other circumstances of the insured event.

If, based on provisions of the insurance contract, the insurer deems that the above-mentioned relevant proofs and information are insufficient, the insurer shall notify the proposer, the insured or the beneficiary to provide the missing relevant proofs and information.

Article 24: The insurer shall carry out review of any claim for indemnity or payment of insurance benefits promptly after receiving such claim from the insured or the beneficiary, and notify the said insured or the beneficiary of the result of the review. Where insurance liability exists, the insurer should execute its obligation to make payment of indemnity or insurance benefits within 10 days after reaching an agreement with the insured or the beneficiary for such payment. Where the contract itself makes stipulation regarding the amount of indemnity or insurance benefits, or the deadline for such payment, payment shall be made according to such agreement.

Where the insurer fails to carry out the obligations listed above, in addition to paying the relevant indemnity or insurance benefits, the insurer shall also compensate the insured or the beneficiary for losses incurred therefrom.

No entity or individual may unlawfully interfere with the insurer's performance of its obligation to make payment of indemnity or insurance benefits, nor shall it restrict the rights of the insured or the beneficiary to obtain such payments.

"Insured amount" refers to the maximum amount of money that the insurer shall be liable to pay as indemnity or insurance benefits for a given insured subject matter.

Article 25: If a claim for payment of indemnity or insurance benefits from an insured or the beneficiary is beyond the scope of the insurer's underwritten liability, then upon receiving such claim from the insured or the beneficiary, the insurer shall issue a written notice of rejection of claim to the said insured or beneficiary.

Article 26: If the amount of indemnity or insurance benefits to be paid cannot be determined within 60 days after the insurer receives notification of a claim with corresponding information and proofs, the insurer shall first pay the minimum amount that may be expected to be due based on currently available proofs and information. After determining the final amount of indemnity or insurance benefits, the insurer shall make up the difference in respect of such indemnity or insurance benefits.

Article 27: For any type of insurance other than life insurance, the right of the insured or the beneficiary to claim indemnity or insurance benefits shall lapse if not exercised within two years from the date the insured or the beneficiary is aware of the occurrence of an insured event.

For life insurance, the right of the insured or the beneficiary to claim insurance benefits shall lapse if not exercised within five years from the date the insured or the beneficiary is aware of the occurrence of an insured event.

Article 28: In the event that the insured or the beneficiary fraudulently reports that an insured event has occurred when no such event has actually occurred, and furthermore claims payment of indemnity or insurance benefits based on such fraudulent report, the insurer shall have the right to rescind the insurance contract with no obligation to refund the premium.

In the event that the proposer, the insured or the beneficiary deliberately causes an insured event to occur, the insurer shall have the right to rescind the insurance contract and shall not be liable for payment of insurance indemnity or benefits, nor shall the insurer be obligated to refund the premium unless otherwise stipulated in the first paragraph of Article 65 hereof.

In the event that the proposer, the insured or the beneficiary fabricates false causes for an event or overstates the degree of losses by means of forged or altered relevant proofs, information or other evidence after the occurrence of such event, the insurer shall not be liable for payment of indemnity or insurance benefits for the portion that is false.

The proposer, the insured or the beneficiary shall return the insurance monies or reimburse the expenses paid by the insurer as a result of any of the acts in the preceding three paragraphs performed by the said proposer, insured or beneficiary.

Article 29: "Reinsurance" means that the insurer transfers a portion of its underwritten business to another insurer in the form of a cede policy.

At the request of the reinsurance assignee, the reinsurance assignor shall disclose information about the underwritten liability and other circumstances of the original insurance to the reinsurance assignee.

Article 30: The reinsurance assignee shall not request payment of premiums from the original proposer.

The insured or the beneficiary of the original insurance contract shall not make claim for indemnity or payment of insurance benefits to the reinsurance assignee.

The reinsurance assignor (proposer for reinsurance) may not refuse to perform or delay the performance of its original insurance liability on the grounds of the failure of the reinsurance assignee to perform its reinsurance liability.

Article 31: When adjudicating conflict over the meaning of the terms and clauses of an insurance contract arising between the insurer and the proposer, the insured and/or the beneficiary of the contract, the people's court or arbitration committee presiding shall construe the contested terms and clauses in a manner favourable to the insured and the beneficiary.

Article 32: The insurer or reinsurance assignee shall be obligated to preserve the confidentiality of any information concerning the business, property or personal matters of the proposer, insured, beneficiary or reinsurance assignor that is disclosed in the process of concluding insurance business.

Section Two: Property Insurance Contracts

Article 33: Property insurance contracts are insurance contracts that take property and interests related to property as their insured subject matter.

Unless otherwise noted, the term "contract" as used in this section shall refer to property insurance contracts.

Article 34: When the insured subject matter is assigned, the insurer shall be informed of such assignment, and the pertinent insurance contracts shall be amended to reflect such assignment, subject to agreement from the insurer to continue to insure said property. However, contracts for insurance of goods in transit and contracts containing specific stipulations that provide otherwise shall be exempted from this requirement.

Article 35: Insurance contracts for goods in transit or shipping vehicles or vessels en route cannot be rescinded by the contractual parties once the underwriter's liability has begun.

Article 36: The insured shall abide by State provisions on fire prevention, safety, production operations, labour protection and so on, in order to protect the safety of the insured subject matter.

The insurer may, in accordance with the provisions of the contract, examine the circumstances of the safety of the insured subject matter, and at any time issue to the proposer and/or the insured party written proposals for the elimination of hazards and hidden dangers to the insured subject matter.

If the either proposer or the insured fails to carry out its contractual obligation to fully protect the safety of the insured subject matter, the insurer shall have the right to increase the premium, or else to rescind the contract.

Subject to the consent of the insured, the insurer may take special measures to protect the safety of insured subject matter.

Article 37: If the level of risk to the insured subject matter increases during the term of an insurance contract, the insured shall promptly inform the insurer in accordance with the contract, and the insurer shall be entitled to increase the premium, or else rescind the contract.

In the event that the insured fails to carry out the obligation to inform as described in the previous paragraph, the insurer shall not be liable to compensate for events resulting from such increased levels of risk.

Article 38: In any of the circumstances listed below, unless the contract has other stipulations, the insurer shall reduce the premium and refund the corresponding premium calculated on a daily pro-rated basis:

1. a change occurs in the circumstances upon which the premium rate is determined, resulting in a significant decrease in the degree of risk to which the insured subject matter is exposed; or

2. the insured value of the insured subject matter decreases significantly.

Article 39: In the event that the proposer requests rescission of an insurance contract before the commencement of the insurance liability, the said proposer shall pay a processing fee to the insurer and the insurer shall refund the premium. In the event that the proposer requests rescission of an insurance contract after the commencement of the insurance liability, the insurer may retain the premiums for the period from the date of the commencement of the insurance liability until the date of the rescission of the contract, and refund the remainder.

Article 40: The insured value of insured subject matter may be agreed to between the proposer and the insurer and specified in the insurance contract, or may be determined as the actual value of the insured subject matter at the time of the occurrence of an insured event.

The sum insured shall not exceed the insured value, any amount in excess of the insured value shall be deemed invalid.

Where the sum insured is less than the insured value, the insurer shall undertake indemnity liability in accordance with the proportion of the sum insured to the insured value, unless the contract stipulates otherwise.

Article 41: Information relevant to dual insurance shall be reported by the proposer to all concerned insurers.

Where the total of the sums insured under dual insurance exceeds the insured value of the insured subject matter, the total amounts of indemnity contributed by all insurers shall not exceed the insured value. Each insurer shall undertake indemnity liability according to the ratio of the sum underwritten by it to the total of the sums insured, unless the contract provides otherwise.

"Dual insurance" refers to insurance under which the proposer enters into insurance contracts with two or more insurers for the same insured subject matter, the same insurable interest and the same insured event(s).

Article 42: When an insured event occurs, the insured shall be obligated to take every necessary measure to prevent or mitigate further damage.

The necessary, reasonable expenses incurred in the course of the insured taking measures to prevent or mitigate damage after the occurrence of an insured event shall be borne by the insurer. Such expenses shall be calculated separately from the compensation for the losses of the insured subject matter, but shall not exceed the sum insured.

Article 43: In the event that partial damage or loss occurs to the insured subject matter, the proposer may terminate the contract within 30 days of receiving indemnity from the insurer; the insurer may also terminate the contract unless the contract specifies otherwise. If the insurer terminates the contract, it shall give a minimum of 15 days prior notice to the proposer, and refund the premium on the undamaged portion of the insured subject matter after deducting the part of premium for the period from the commencement of insurance liability to the termination of the contract.

Article 44: Subsequent to the occurrence of an insured event for which the insurer has paid the sum insured in full, and for which the sum insured is identical to the insured value, all rights to the damaged insured subject matter shall pass to the insurer, or, where the sum insured is less than the insured value, the insurer shall obtain rights to the damaged insured subject matter proportionate to the share of the sum insured in the insured value.

Article 45: Where an insured event occurs due to damage to the insured subject matter caused by a third party, the insurer shall, from the date of payment of indemnity to the insured, be subrogated to the rights of the insured to claim compensation from the said third party within the amount of indemnity paid.

Where the insured has already obtained compensation from a third party following the occurrence of an insured event as mentioned in the preceding paragraph, the insurer may, at the time of paying the indemnity, deduct an amount equivalent to such compensation obtained by the insured from the third party.

The exercise by the insurer of its subrogated rights to claim compensation from a third party according to the first paragraph of this article shall have no impact on the insured's right to claim compensation from the third party for the portion that has not been compensated.

Article 46: Where the insured waives its rights to claim compensation from a third party subsequent to the occurrence of an insured event and before the insurer has paid indemnity to the insured, the insurer shall not be liable for the payment of indemnity.

Where the insured, without the consent of the insurer, waives its rights to claim compensation from a third party subsequent to having been paid indemnity by the insurer, such waiver shall be deemed invalid.

Where the insurer is unable to exercise its subrogated rights to compensation from a liable third party due to the fault of the insured, the insurer may correspondingly reduce the amount of indemnity to the insured.

Article 47: The insurer shall not be subrogated any rights to claim compensation from family members or members of the household of an insured, except in the case that such family or household members deliberately cause an insured event such as is described in the first paragraph of Article 45 hereof.

Article 48: When the insurer exercises subrogated rights to claim compensation from a third party, the insured shall provide the insurer with necessary documents and relevant known information.

Article 49: Necessary and reasonable expenses incurred by the insurer and the insured in the process of investigating and determining the nature and cause of an insured event and the degree of damage incurred to the insured subject matter shall be borne by the insurer.

Article 50: The insurer may directly indemnify a third party for damage to that third party caused by the insured under liability insurance in accordance with the provisions of laws or the terms of the contract.

"Liability insurance" refers to the type of insurance in which the insured subject matter is the insured's liability to indemnify a third party according to law.

Article 51: Where arbitration or legal proceedings are instituted against the insured under liability insurance as a result of damages caused to a third party by an insured event, the arbitration or court costs and other necessary and reasonable expenses paid by the insured shall be borne by the insurer, unless the contract provides otherwise.

Section Three: Contracts of Insurance of the Person

Article 52: A contract of insurance of the person shall refer to an insurance contract the subject matter of which is the life or body of a natural person.

In this section, the term "contract of insurance of the person" shall be abbreviated to "contract", unless expressly stated otherwise.

Article 53: A proposer shall have an insurable interest in the following persons:

1) oneself;

2) one's spouse, children or parents; and

3) other family members or close relatives, in addition to those aforementioned, who have a foster, support or maintenance relationship with the proposer.

In addition to the persons mentioned in the preceding paragraph, the proposer shall be deemed to have an insurable interest in any insured person who agrees with the proposer to conclude a contract for him.

Article 54: If a proposer untruthfully reports the age of the insured, and if the true age of the insured party is not within the range specified in the contract, the insurer may rescind the contract and refund the premium, less a service fee. However, this right shall lapse if not excercised within the first two years following execution of the contract.

If a proposer untruthfully reports the age of the insured party, resulting in the insurer collecting lower premium fees than it should be entitled to based on the true age of the insured, the insurer shall have the right to rectify the inaccuracy and simultaneously request the applicant to pay the balance, or alternatively may pay an amount adjusted in the same proportion that the amount of premium actually collected comprises relative to the amount of premium that should properly have been collected based on the true age of the insured, when making disbursement of corresponding insurance benefits.

If a proposer untruthfully reports the age of the insured party, resulting in the insurer collecting higher premium fees than it should be entitled to based on the true age of the insured, the insurer shall refund the excess premium to the applicant.

Article 55: A proposer may neither propose, nor may an insurer underwrite, a contract stipulating the death of a person without capacity for civil acts as the condition for payment of benefits.

Contracts proposed by parents for insurance of their minor children shall not be governed by the preceding paragraph, provided that the total sum insured payable upon the death of minor children whose lives are insured does not exceed the limit set by the insurance regulatory authority.

Article 56: An insurance contract under which the payment of insurance benefits is made conditional upon the death of the insured shall not be valid without the written consent of the insured giving approval of the sum insured.

An insurance policy issued under a contract taking the death of the insured party as the prerequisite for the payment of insurance benefits shall not be transferred or pledged without the written approval of the insured.

Insurance proposed by parents for their minor children shall not be governed by the first paragraph.

Article 57: After a contract has been concluded, the proposer may pay the premium in a lump sum or in instalments as specified in the contract.

Where the contract stipulates payments of premium in instalments, the proposer shall pay the first instalment when the contract is concluded and pay the remaining instalments in accordance with the instalments schedule.

Article 58: Where the contract stipulates payments of premiums in instalments, and if, after making the first payment, the proposer fails to pay any subsequent instalment within 60 days after the prescribed time limit, the validity of the contract shall be suspended, or the insurer may reduce the sum insured according to the provisions of the contract, unless otherwise provided for in the contract.

Article 59: If the validity of an insurance contract is suspended according to the stipulation of the previous article, validity of the said contract may be restored after the insurer and proposer reach an agreement through negotiation and the proposer pays the outstanding premium. However, if no agreement is reached between the insurer and proposer within two years from the date of suspension, the insurer shall have the right to rescind the contract.

Where the insurer rescinds a contract according to the stipulation of the previous paragraph, and where the proposer has paid premiums for two or more years, the insurer shall refund the cash value of the policy to the proposer in accordance with the provisions of the contract; or if the proposer has paid premium for less than two years, the insurer shall refund the premium after deducting a service charge.

Article 60: The insurer shall not resort to litigation to require payment of insurance premiums for insurance policies of the person.

Article 61: The beneficiary of a contract of insurance of the person shall be designated by the insured or the proposer.

Where the beneficiary is designated by the proposer, the consent of the insured must be obtained.

Where the insured is an individual without capacity for civil acts or with limited capacity for civil acts, the beneficiary may be designated by his guardian.

Article 62: The insured or the proposer may designate one or more individuals as beneficiaries.

Where there are several beneficiaries, the order in which payment of insurance benefits shall be made and the proportions in which insurance benefits shall be distributed to individual beneficiaries shall be determined by the proposer or the insured. Where proportions for benefits distribution are not determined in advance, benefits shall be divided equally among the beneficiaries.

Article 63: The proposer or the insured may change the beneficiary and notify the insurer of this in writing. Upon receiving written notification of the change of beneficiary from the proposer or insured, the insurer shall make an endorsement to that effect on the insurance policy.

A change of the beneficiary made by the proposer shall be subject to the consent of the insurer.

Article 64: In any of the following circumstances, following the death of the insured, the relevant life insurance benefits shall become a legacy of the insured, and the insurer shall pay the corresponding insurance benefits to the heirs of the insured:

1) there are no beneficiaries designated;

2) a beneficiary passed away before the insured, and no other beneficiaries have been named; or

3) a beneficiary lawfully loses or waives his beneficiary right, and there are no other beneficiaries.

Article 65: Where the proposer or a beneficiary deliberately causes the death, injury or illness of the insured, the insurer shall bear no liability to pay corresponding insurance benefits. Where the proposer has already paid premium for two or more years, the insurer shall return the cash value of the policy to the other entitled beneficiaries as provided for in the contract.

Any beneficiary deliberately causing the death or injury of the insured, or attempting to murder the insured, shall forfeit the right to receive payment as a beneficiary under the contract.

Article 66: For a contract stipulating death as the condition for payment of insurance benefits, the insurer shall not be liable to pay insurance benefits in the case that the insured commits suicide, except in the case of the second paragraph of this article. In regard to the premium already paid, however, the insurer shall refund the cash value of the policy according to the policy terms.

For a contract stipulating death as the condition for payment of insurance benefits that has been in effect for two or more years, the insurer may pay insurance benefits in accordance with the contract if the insured commits suicide after two years from the date of conclusion of the contract.

Article 67: Where the insured is injured, disabled or killed in the course of committing an intentional crime, the insurer shall not be liable to make payment of insurance benefits. Where the proposer has paid premium for two or more years, the insurer shall return the cash value of the policy.

Article 68: Where the death, injury, disability or illness of the insured is caused by the action of a third party, the insurer shall not be subrogated the rights to claim compensation from said third party after making payment of insurance benefits to the insured or the beneficiary. However, the insured or the beneficiary shall retain the right to claim compensation from said third party.

Article 69: Where a proposer who has been paying premium for two or more years rescinds the contract, the insurer shall refund the cash value of the insurance policy within 30 days after receiving the notice of rescission. Where the proposer has been paying premium for less than two years, the insurer shall refund the premium after deducting a service charge in accordance with the contract.

PART THREE: INSURANCE COMPANIES

Article 70: Insurance companies shall adopt one of the following organizational forms:

1) company limited by shares; or

2) wholly State-owned company.

Article 71: The establishment of an insurance company shall be subject to the approval of the insurance regulatory authority.

Article 72: The following conditions shall be met for the establishment of an insurance company:

1) possession of the articles of association that conform to this Law and the Company Law;

2) possession of the minimum amount of registered capital prescribed herein;

3) possession of senior management personnel with the professional knowledge of their positions and with working experience in the business;

4) possession of a sound organizational structure and management system; and

5) possession of a business site that meets the requirements, and other business-related facilities.

The insurance regulatory authority shall take into consideration the needs for the development and fair competition of the insurance industry when examining an application for approval to establish insurance companies.

Article 73: The minimum registered capital required for the establishment of an insurance company shall be Rmb200 million.

The minimum registered capital of an insurance company must be paid-in monetary capital.

Insurance regulatory authorities may adjust the minimum registered capital requirement for an insurance company based on the scope of business and business scale of the insurance company, however, the adjusted amount of capital requirement shall not be less than that stipulated in the first paragraph of this article.

Article 74: The following documents and information shall be submitted for the establishment of an insurance company:

1) an application for establishment, containing name, registered capital and scope of business of the proposed company;

2) a feasibility study report; and

3) other documents and information required by the insurance regulatory authority.

Article 75: Subsequent to preliminary examination of an application to establish an insurance company, the applicant shall undertake preparatory establishment procedures according to the stipulations of this Law and the Company Law. For those that meet the requirements specified in Article 72 of this Law, the following documents and information shall be submitted together with a formal application form:

1) the articles of association of the insurance company;

2) the register of shareholders and shareholding owned by such shareholders, or the register of contributors and the amounts of their contributions;

3) proof of creditworthiness and relevant information on the shareholders holding 10% or more of the shares;

4) capital verification certificates issued by the statutory capital verification authority;

5) resumes and qualification certificates of the senior management personnel who are to hold positions;

6) business policies and plans;

7) information on the business site and other business-related facilities; and

8) other documents and information specified by the insurance regulatory authority.

Article 76: The insurance regulatory authority shall make a decision as to whether or not to approve the establishment of an insurance company within six months after receiving a formal application form for that.

Article 77: The approval authority shall issue a permit for insurance business operations to an insurance company approved to be established. Such insurance company shall then handle registration procedures with, and obtain a business licence from, the administration for industry and commerce on the strength of such permit.

Article 78: If, for no justifiable reason, an insurance company does not carry out company registration procedures within six months of being issued a permit to engage in insurance business operations, the said permit shall automatically become null and void at the end of said six month period.

Article 79: Upon establishment, an insurance company shall deposit 20% of its registered capital into a bank designated by the insurance regulatory authority as a security fund. This fund shall not be used for any purpose other than to pay off debts during liquidation proceedings.

Article 80: An insurance company must obtain approval from the insurance regulatory authority to establish branch office inside or outside the People's Republic of China, and must obtain a separate permit to engage in insurance business operations for each such branch office.

The branch offices of insurance companies shall not have status as legal persons; their civil liability shall be borne by the insurance company itself.

Article 81: An insurance company must obtain approval from the insurance regulatory authority to establish a representative office inside or outside the People's Republic of China.

Article 82: An insurance company must obtain approval from the insurance regulatory authority to make any of the following alterations:

1) change of name;

2) change of registered capital;

3) change of business premises of the company itself or of any branch office of the company;

4) adjustment to the scope of business;

5) division or merger of the company;

6) amendment to the company's articles of association;

7) change of investor or any shareholder holding 10% or more of the shares in the company; or

8) other changes stipulated by the insurance regulatory authority.

The replacement by an insurance company of the chairman of its board of directors or its general manager shall be reported to the insurance regulatory authority for examination of the qualifications of those persons nominated for those positions.

Article 83: The provisions of the Company Law shall apply to the organizational structure of an insurance company.

Article 84: Wholly State-owned insurance companies shall establish a board of supervisors. A board of supervisors shall be composed of representatives from insurance regulatory authorities, relevant experts and employees of the insurance company, and shall exercise supervision over matters such as the drawing of various reserves and the minimum solvency of the wholly State-owned insurance company, as well as the preservation and appreciation of State-owned assets within the company and activities by senior management personnel in violation of law, administrative regulations or articles of association and other acts harmful to the interests of the company.

Article 85: An insurance company shall be dissolved subject to approval from the insurance regulatory authority in the event of division, merger or other event stipulated in the articles of association as cause for dissolution. An insurance company shall establish a liquidation committee and carry out liquidation in accordance with the law.

An insurance company engaging in life insurance business shall not be dissolved under any circumstance other than division or merger.

Article 86: When the insurance regulatory authority revokes an insurance company's permit to engage in insurance business operations due to activities of the said company in violation of laws or administrative regulations, said company shall be closed down according to the law, and the insurance regulatory authority shall duly organize a liquidation committee to carry out liquidation in accordance with the law.

Article 87: Insurance companies that cannot pay debts upon maturity shall be lawfully declared bankrupt by a people's court after the insurance regulatory authority has given its approval. Where an insurance company is declared bankrupt, the people's court shall organize relevant work units such as the insurance regulatory authority, etc., and relevant individuals to set up a liquidation committee for carrying out liquidation.

Article 88: Where an insurance company with life insurance business is closed down or declared bankrupt according to law, its life insurance contracts and reserves must be transferred to another insurance company with life insurance business. Where no transfer agreement can be reached with another insurance company, the insurance regulatory authority shall designate an insurance company with life insurance business to take over such contracts and reserves.

When transferring or accepting, as designated by the insurance regulatory authority, life insurance contracts and reserves stipulated in the preceding paragraph, the lawful rights and interests of the insured and the beneficiary shall be protected.

Article 89: When an insurance company is declared bankrupt in accordance with the law, after first paying off expenses incurred during the bankruptcy and liquidation process, remaining property shall be distributed in the following order of priority:

1) outstanding staff and worker's wages and labour insurance expenses;

2) indemnities or insurance benefits;

3) taxes owed; and

4) settlement of company debts.

Where assets are insufficient to completely pay off all debts, assets available for partial payment of the debts within a particular level of this priority ranking shall be disbursed between the debts owed at said level in proportion to the share of that debt in the total amount of all debts within said level of priority.

Article 90: If an insurance company terminates its business operations in accordance with the law, it's permit to engage in insurance business operations shall also be revoked.

Article 91: In the absence of provisions of this Law, the Company Law and other relevant laws and administrative regulations shall be applied to such matters as the establishment of, changes to, dissolution and liquidation of an insurance company.

PART FOUR: RULES FOR INSURANCE BUSINESS OPERATIONS

Article 92: Scope of business of insurance companies:

1) Property insurance business, including property loss insurance, liability insurance, credit insurance, etc.

2) Insurance of the person, including life insurance, health insurance, accidental injury insurance, etc.

A single insurer shall not simultaneously engage in both property insurance and insurance of the person insurance business; however, subject to approval from the insurance regulatory authority, a property insurance company may engage in short-term health insurance business and accidental injury insurance business.

The specific scope of business of an insurance company shall be approved by insurance regulatory authority in accordance with the law. Insurance companies shall only engage in insurance business activities within the approved scope of business.

Insurance companies shall not otherwise engage in any business activities not stipulated by this Law, other laws or administrative regulations.

Article 93: Subject to approval from the insurance regulatory authority, insurance companies may engage in the following reinsurance business for insurance business prescribed in the preceding clause:

1) ceding reinsurance; and

2) assuming reinsurance.

Article 94: Insurance companies should make allocations to various portfolio reserves on the principle of protecting the rights and interests of the insured and guaranteeing the solvency of the company.

Specific measures for the allocation and carrying over of insurance companies' portfolio reserves shall be formulated by the insurance regulatory authority.

Article 95: Insurance companies shall make allocations to reserves for pending payments based on the total amount of indemnity and insurance benefits already claimed and not yet claimed after the occurrence of an insured event.

Article 96: In addition to making allocations to reserves in accordance with the two preceding articles, insurance companies shall make allocations to a common reserve in accordance with the provisions of the relevant laws, administrative regulations and State financial and accounting systems.

Article 97: In order to safeguard the interests of the insured and support the stable and sound operation of insurance companies, insurance companies shall deposit allocations into an insurance guarantee fund as prescribed by the insurance regulatory authority.

Insurance guarantee funds should be centrally managed, and usage of such funds shall be comprehensively planned.

The specific measures for the management and usage of insurance guarantee funds shall be formulated by insurance regulatory authority.

Article 98: Insurance companies shall maintain minimum solvency commensurate with the scale of their business operations. The balance between actual assets and actual liabilities shall not fall below the limit set by the insurance regulatory authority. Should this difference fall below the stipulated limit, the insurance company shall increase its capital to make up the difference.

Article 99: The self-retained premiums of the current year of an insurance company engaging in property insurance business shall not exceed four times the sum of the paid-in capital and common reserve of the company.

Article 100: The liability of an insurance company for each risk unit, that is, the maximum amount of loss that may be caused by a single insured event, may not be more than 10% of the sum of paid-in capital and common reserve of such insurance company. Any part exceeding the sum shall be reinsured.

Article 101: Insurance companies shall report their methods of calculating risk units and their arrangement plans for catastrophic risks to the insurance regulatory authority for review and approval.

Article 102: Insurance companies shall take out reinsurance coverage according to the relevant provisions of the insurance regulatory authority.

Article 103: An insurance company needing to cede reinsurance business shall give priority to insurance companies inside the People's Republic of China.

Article 104: The insurance regulatory authority shall have the right to restrict or prohibit an insurance company from ceding reinsurance business to or assuming reinsurance business from insurance companies outside the People's Republic of China.

Article 105: The utilization of funds by insurance companies shall be sound and safe in nature, adhering to the principle of security, while also guaranteeing the preservation and appreciation of asset value.

The utilization of funds by insurance companies shall be limited to bank deposits, trading of government bonds and financial bonds, and other means of funds utilization specified by the State Council.

The funds of insurance companies shall not be used to establish securities business organizations, or to establish enterprises outside the realm of insurance.

The total funds of an insurance company that can be utilized, as well as the proportion that can be used for any specific item, shall be stipulated by the insurance regulatory authority.

Article 106: Insurance companies and their employees shall not commit any of the following acts in the course of insurance business operations:

1) defraud proposer, the insured or beneficiary;

2) conceal important circumstances pertinent to relevant insurance contracts from the proposer;

3) hinder the proposer from performing, or induce the proposer not to perform, his duty of disclosing the true details as specified herein;

4) promise to pay rebate on insurance premium or offer other benefits not specified in the insurance contract itself to the proposer, the insured, or the beneficiary; or

5) deliberately fabricate fictitious insured events and engage in falsified claims, in order to fraudulently obtain indemnity or insurance benefits.

PART FIVE: SUPERVISION AND ADMINISTRATION OF THE INSURANCE INDUSTRY

Article 107: Clauses and premium rates of insurance products having a bearing on the public interest, insurance products for compulsory insurance as prescribed by law, and new types of life insurance products, etc. shall be submitted to the insurance regulatory authority for examination and approval. In carrying out the examination and approval process, the authority shall abide by the principles of protecting the public interest and preventing unfair competition. The scope and specific procedures of examination and approval shall be formulated by the insurance regulatory authority.

Clauses and premium rates for insurance products of all other types shall be filed with the insurance regulatory authority for the record.

Article 108: The insurance regulatory authority shall establish a complete system of benchmark indices for the monitoring of the solvency of insurance companies, and implement monitoring and control of the minimum solvency of insurance companies.

Article 109: The insurance regulatory authority shall have the right to inspect circumstances pertaining to an insurance company's business, financial and funds utilization circumstances, and shall have the right to require insurance companies to submit relevant written reports and information within specific time limits.

Insurance companies shall accept supervision and inspection according to the law.

The insurance regulatory authority shall have the right to inquire about the deposits of insurance companies within financial institutions.

Article 110: Where an insurance company fails to allocate or carry over funds to various reserves portfolios or handle reinsurance in accordance with the provisions hereof, or materially violates the provisions hereof relating to the utilization of funds, the insurance regulatory authority shall order such insurance company to rectify the situation within a specified time limit by adopting the following measures:

1) allocating or carrying over the funds to various reserves according to law;

2) handling reinsurance according to law;

3) rectifying illegal utilization of funds; and

4) replacing responsible persons and relevant management personnel.

Article 111: If an insurance company does not carry out corresponding rectification within the specified time limit after being ordered to do so according to the stipulations of the preceding article, the insurance regulatory authority may then appoint certain insurance specialists and designate relevant personnel of the insurance company to form a rectification committee to carry out rectification of the company.

The decision to carry out rectification procedures shall clearly state the name of the company under rectification, cause for rectification, makeup of the rectification committee and term of rectification, and shall be publicly announced.

Article 112: The rectification committee shall be authorized to monitor the daily business activities of the insurance company under rectification during the rectification process. The person in charge and relevant management personnel of the company shall exercise their own functions and powers under the supervision of the rectification committee.

Article 113: In the course of rectification, an insurance company may continue to carry out its original business, however, the insurance regulatory authority shall have the right to prohibit the development of new business, or to suspend a portion of the original business, and adjust the utilization of funds.

Article 114: When an insurance company under rectification has redressed its violations of this Law and resumed its normal business operations, the rectification committee shall issue a report and the rectification shall be ended after approval from the insurance regulatory authority.

Article 115: The insurance regulatory authority may undertake direct takeover of any insurance company violating this Law in such a fashion as to cause damage to the public interest, or as is likely to imperil or have already imperilled the solvency of the company.

The purpose of such takeover shall be to implement necessary measures to protect the rights and interests of the insured and restore the normal operation of the company. The debtor/creditor relationships to which the taken-over company is a party shall not be changed by such takeover.

Article 116: The constitution of the takeover organization and measures for the implementation of the takeover process shall be decided by the insurance regulatory authority and announced to the public.

Article 117: The insurance regulatory authority may decide to extend the takeover period at the end of the stipulated takeover period, however the total term of takeover shall not exceed two years.

Article 118: If the taken-over company has been restored to normal operations at the end of the takeover term, the insurance regulatory authority may decide to terminate takeover of the company.

If the takeover organization believes that the assets of the taken-over company are already insufficient to pay off all outstanding debt, and subject to approval from the insurance regulatory authority, application shall be made to the people's court to have the said taken-over company declared bankrupt, according to law.

Article 119: An insurance company shall submit its business report, financial and accounting reports and other relevant reports of the preceding year to the insurance regulatory authority and carry out public disclosure of those reports according to law within three months after the end of each accounting year.

Article 120: By the end of each month, an insurance company shall submit to the insurance regulatory authority statements of business statistics for the preceding month.

Article 121: An insurance company shall employ actuarial professionals certified by the insurance regulatory authority, and shall establish systems for actuarial reporting.

Article 122: The business reports, financial and accounting reports, actuarial reports and other relevant reports, documents and materials formulated by an insurance company shall be truthful records of insurance business activities, and shall not contain false records, misleading statements or significant omissions.

Article 123: The insurers and the insured may employ independent evaluation organizations established according to law or experts with legal qualifications to carry out evaluation and appraisal of insured events.

Evaluation organizations and experts employed in accordance with the law to undertake evaluation and appraisal of insured events shall carry out their duties fairly according to law. In the event that such evaluation organizations and experts deliberately or negligently cause damage to the insurer or the insured, they shall bear liability to make commensurate compensation.

Evaluation organizations conducting evaluation and appraisal of insured events in accordance with the law shall collect fees according to laws and administrative regulations.

Article 124: Insurance companies shall properly keep a complete set of account books, the original vouchers and other information relevant to their business activities.

The term for keeping a complete set of account books, original vouchers and relevant information mentioned in the preceding paragraph shall begin from the date of termination of an insurance contract, and may not be less than 10 years.

PART SIX: INSURANCE AGENTS AND BROKERS

Article 125: Insurance agents shall be entities or individuals entrusted by an insurer to handle insurance business on behalf of the insurer within the scope of the insurer's authorization and shall charge an agency fee to the insurer.

Article 126: An insurance broker is an entity that, based upon the interests of the proposer, provides intermediary services for the conclusion of an insurance contract between said proposer and the insurer, and therefore retains a commission fee in accordance with the law.

Article 127: The insurer shall conclude an agency agreement with an agent whenever such insurer commissions the agent to carry out insurance business activities in proxy; said agency agreement shall stipulate the rights and obligations of the respective parties as well as other matters pertaining to the agency relationship in accordance with the law.

Article 128: Liability for the actions of an insurance agent in carrying out insurance business activities according to the commission of the insurer shall be borne by the insurer.

The insurer shall bear insurance liability for actions of its agent even if the agent has acted beyond its scope of commission, provided that the proposer had reason to believe that the agent was acting within its commission and a corresponding contract has been signed. However, the insurer may subsequently pursue the liability of the agent for its actions beyond the commission in accordance with the law.

Article 129: An individual insurance agent performing life insurance business activities shall not accept commissions from more than one insurer concurrently.

Article 130: Where the acts of fault of an insurance broker committed in the course of carrying out insurance business activities cause loss to the proposer or the insured, the insurance broker shall bear liability to compensate.

Article 131: Insurance agencies and brokers shall not engage in any of the following behaviours during the course of carrying out insurance business activities:

1) defraud the insurer, the proposer, the insured or the beneficiary;

2) conceal important circumstances germane to the insurance contract;

3) obstruct the proposer from performing the obligation stipulated in this Law to make truthful disclosure, or induce such proposer not to make such truthful disclosure;

4) promise to provide other interests to the proposer, the insured or the beneficiary not stipulated in the contract; or

5) resort to administrative power or occupational (positional) or professional convenience, or any other improper means, to impel, induce or restrict a proposer to enter into any insurance contract.

Article 132: An insurance agent or broker shall possess the qualification stipulated by the insurance regulatory authority, obtain a permit for insurance agency business operations or insurance brokerage business operations from the authority, register with and obtain a business licence from the relevant administration for industry and commerce, and either deposit a guarantee fund or else obtain insurance coverage for professional liability.

Article 133: Insurance agents and insurance brokers shall have their own business sites, special account books for recording the particulars of revenue and expenditure relating to insurance agency or brokerage business, and shall be subject to supervision of the insurance regulatory authority.

Article 134: Insurance agency fees or brokerage commission shall only be paid to legally certified insurance agents or brokers, and shall not be paid to any other parties.

Article 135: Insurance companies shall keep a register of their insurance agents.

Article 136: Insurance companies shall augment training of and administration of their agents in order to improve the professional ethics and business skills of their agents; and shall not induce or mislead agents to resort to activities in contravention of the obligation for honesty and good faith.

Article 137: Articles 109 and 119 of this Law shall apply to insurance agents and brokers.

PART SEVEN: LEGAL LIABILITY

Article 138: Where a proposer, an insured or a beneficiary engages in insurance fraud by committing any of the following acts, and a criminal offence is constituted, his criminal liability shall be pursued according to law:

1) an insurance applicant deliberately fabricates phony subject matter for an insurance contract and fraudulently collects insurance indemnity;

2) falsely claims that an event insured against has occurred before such event has actually occurred for the purpose of defrauding the insurer of insurance monies;

3) deliberately causes the occurrence of an insured event resulting in property damage and thereby fraudulently collects insurance indemnity;

4) deliberately causes an insured event resulting in the death, injury, illness or other similar harm to the person of the insured party to an insurance contract of the person, with the intention of thereby fraudulently collecting insurance benefit; or

5) counterfeits or alters documents, materials or other evidence germane to an insured event, or incites, suborns or bribes another party to provide false documents, materials or other evidence germane to an insured event, in order to fabricate a falsified cause for the accident or exaggerate the amount of damage incurred from the accident, with the intention of thereby fraudulently collecting insurance indemnity.

Where the circumstances of any of the acts set forth in the preceding paragraph are not so serious as to constitute a criminal offence, an administrative penalty shall be imposed in accordance with the relevant State regulations.

Article 139: Where an insurance company or its working personnel withhold, in the course of insurance operations, important details relating to an insurance contract, deceive the proposer, the insured or the beneficiary, or refuse to perform the obligation of paying indemnity or insurance benefits as stipulated in the insurance contract, and thus a criminal offence is constituted, criminal liability shall be pursued according to law. Where no criminal offence is constituted, the insurance regulatory authority shall impose a fine of between Rmb50,000 and Rmb300,000 on the insurance company. A fine of between Rmb20,000 and Rmb100,000 shall be imposed on the working personnel who committed the illegal acts. Where the circumstances are serious, the insurance regulatory authority shall restrict the scope of business of the insurance company and order cessation of the acceptance of new business

Where an insurance company or its working personnel hinder proposers to perform, or induce proposers not to perform, their duty of disclosing true details, or promise the proposer, the insured or the beneficiary an illegal rebate on the insurance premium or other benefits in a fashion constituting a criminal offence, criminal liability shall be pursued according to law. Where no criminal offence is constituted, the insurance regulatory authority shall order rectification and impose a fine of between Rmb50,000 and Rmb300,000 on the insurance company. A fine of between Rmb20,000 and Rmb100,000 shall be imposed on the working personnel who committed the illegal acts. Where the circumstances are serious, the insurance regulatory authority shall restrict the scope of business of the insurance company and order cessation of the acceptance of new business.

Article 140: Where an agent or an insurance broker deceives the insurer, the proposer, the insured or the beneficiary in the course of business operations in a manner constituting a criminal offence, corresponding criminal liability shall be pursued according to law. Where no criminal offence is constituted, the insurance regulatory authority shall order rectification and impose a fine of between Rmb50,000 and Rmb300,000. Where the circumstances are serious, the permit for insurance agency business operations or the brokerage permit shall be revoked.

Article 141: Where an insurance company or its working personnel deliberately fabricate a spurious insured event and thereby effect a sham settlement, thereby defrauding the insurer of insurance monies in a manner constituting a criminal offence, criminal liability shall be pursued according to law.

Article 142: Where the provisions of this Law are violated by the unauthorized establishment of an insurance company or by illegal engagement in commercial insurance activities, the insurance regulatory authority shall ban such company or activities. Where a criminal offence is constituted, criminal liability shall be pursued according to law. Where no criminal offence is constituted, the insurance regulatory authority shall confiscate the illegal income and impose a fine of one to five times the amount of the illegal income; where there is no illegal income or the illegal income is less than Rmb200,000, it shall impose a fine of between Rmb200,000 and Rmb1,000,000.

Article 143: Where this Law is violated by engagement in insurance operations exceeding the approved scope of business or concurrent engagement in businesses not stipulated in this Law or other laws or administrative regulations, in a fashion such that a criminal offence is constituted, criminal liability shall be pursued according to law. Where no criminal offence is constituted, the insurance regulatory authority shall order rectification and the return of the insurance premiums received, and confiscate the illegal income and impose a fine of one to five times the amount of the illegal income; where there is no illegal income or the illegal income is less than Rmb100,000, it shall impose a fine of between Rmb100,000 and Rmb500,000. Where rectification is not made within the specified term or serious consequences are caused, it shall order the suspension of business for rectification or revoke the permit for insurance business operations.

Article 144: Where this Law is violated by making an unauthorized change in particulars such as the name, articles of association or registered capital of an insurance company, the business site of an insurance company or a branch office, etc., the insurance regulatory authority shall order rectification and impose a fine of between Rmb10,000 and Rmb100,000.

Article 145: Where any of the following acts is committed in violation of this Law, the insurance regulatory authority shall order rectification and impose a fine of between Rmb50,000 and Rmb300,000; where the circumstances are serious, the insurance regulatory authority may restrict the scope of business, order cessation of the acceptance of new business or revoke the permit for insurance business operations:

1) failure to pay a deposit in accordance with provisions or use of such deposit in violation of provisions;

2) failure to allocate or carry over funds to various portfolio reserves or to allocate funds to the reserve for pending payments in accordance with provisions;

3) failure to make allocations to the insurance security fund or common reserve;

4) failure to reinsure an insurance in accordance with provisions;

5) utilization of insurance company funds in violation of provisions;

6) establishment of a branch office or representative office without approval;

7) division or merger without approval; or

8) failure to submit for approval of insurance clauses and premium rates of insurance products that should be submitted for approval according to provisions.

Article 146: Where any of the following acts is performed in violation of this Law, the insurance regulatory authority shall order rectification and where rectification is not made within the specified term, impose a fine of between Rmb10,000 and Rmb100,000:

1) failure to submit relevant reports, statements, documents and information in accordance with provisions; or

2) failure to submit the insurance clauses and premium rates for the insurance products that should be submitted for the record.

Article 147: Where any of the following acts is performed in violation of this Law in a fashion such as to constitute a criminal offence, criminal liability shall be pursued according to law. Where no criminal offence is constituted, the insurance regulatory authority shall order rectification and impose a fine of between Rmb100,000 and Rmb500,000. Where the circumstances are serious, the insurance regulatory authority may restrict the scope of business, order cessation of the acceptance of new business or revoke the permit for insurance business operations:

1) provision of sham reports, statements, documents or information; or

2) rejection or hindrance of lawful inspection and supervision.

Article 148: Where any of the following acts is performed in violation of this Law, the insurance regulatory authority shall order rectification and impose a fine of between Rmb50,000 and Rmb300,000:

1) submission of false or phony reports, forms, documents and/or other materials; or

2) refusal or obstruction of legally executed inspection, supervision and regulation.

Article 149: Where this Law is violated by engagement in illegal insurance agency or brokerage activities without having obtained a permit for insurance agency business operations or a brokerage permit, the insurance regulatory authority shall ban the activities. Where a criminal offence is constituted, criminal liability shall be pursued according to law. Where no criminal offence is constituted, the insurance regulatory authority shall confiscate the illegal income and impose a fine of five to ten times the illegal income or a fine of between Rmb100,000 and Rmb500,000 if there is no illegal income or the illegal income is less than Rmb100,000.

Article 150: In the case of senior management and other personnel of an insurance company who are directly responsible for acts in violation of this Law that do not constitute a criminal offence, the insurance regulatory authority may, depending on the circumstances, issue a warning, order a replacement of such personnel and/or impose a fine of between Rmb20,000 and Rmb100,000.

Article 151: Where damages are caused to others as a result of violation of this Law, civil liability shall be borne according to the law.

Article 152: Where applications for establishment of an insurance company that fail to meet the requirements specified by this Law are approved or where applications of insurance agents or insurance brokers who fail to meet the requirements are approved, or there are other acts that abuse power, or involve graft or dereliction of duty constitute criminal offences, criminal liability shall be pursued according to law. Where no criminal offence is constituted, administrative sanctions shall be imposed according to law.

PART EIGHT: SUPPLEMENTARY PROVISIONS

Article 153: The stipulations of the Maritime Law shall take precedence in matters of marine insurance business and this Law shall apply where the Maritime Law makes no pertinent stipulations.

Article 154: This Law shall apply to Sino-foreign equity joint insurance companies, wholly foreign-owned insurance companies, and branch companies of foreign insurance companies; however, where other laws or administrative regulations provide otherwise, such stipulations shall prevail.

Article 155: The State shall support the development of insurance business for agricultural production. Agricultural insurance shall be separately provided for by laws or administrative regulations.

Article 156: Insurance organizations of a nature other than insurance companies provided for in this Law shall be separately provided for in laws or administrative regulations.

Article 157: Insurance companies established upon approval in accordance with State Council regulations prior to the implementation of this Law shall be retained. Those that do not meet all the requirements provided herein shall come into compliance with the provisions of this Law within a specified time limit. Specific procedures shall be stipulated by the State Council.

Article 158: This Law shall be effective as of
1 October 1995.

1 Translation provided by Boss & Young, Attorneys at Law. All rights reserved.