State Administration of Foreign Exchange and China Insurance Regulatory Commission, Foreign Exchange Control in Insurance Business Tentative Provisions

Promulgated: September 24 2002
Effective: November 1 2002
Interpreting authority: State Administration of Foreign Exchange
Applicability: These Provisions apply to foreign exchange insurance. They also apply to the receipt, payment, settlement or sale of foreign exchange, and the opening and operation of foreign exchange accounts, related to insurance business, in the PRC (Article 3). "Foreign exchange insurance" means commercial insurance where insurance premiums, indemnities and benefits are to be denominated and settled, in accordance with the insurance contract, in a foreign currency (Article 2).

Main contents: For property insurance where the property covered moves in and out of the PRC, or exists or realizes outside the PRC or through international leases, international syndicated loans or other international finances, or where both the applicant and the beneficiary are foreign legal persons or natural persons, and for personal insurance where the applicant is a foreign legal person or representative office in China and the beneficiary is a foreign natural person or that is an accident and medical insurance taken out by a PRC resident outside the PRC, foreign exchange may be used for payment of insurance premiums, indemnities and benefits and for settlement of insurance contracts (Articles 33 and 34). Insurance companies shall apply to the State Administration of Foreign Exchange (SAFE) for a "Foreign Exchange Business Permit" before they can engage in such foreign exchange insurance business (Article 7). An applicant must have the required amount of paid-up foreign exchange capital. If it has a total capital of Rmb500 million or more, its capital must include at least US$5 million paid-up foreign exchange capital (Article 9). A Foreign Exchange Business Permit will be revoked if its holder's Insurance Business Permit is revoked by the China Insurance Regulatory Commission (Article 15). An insurance company granted with a Foreign Exchange Business Permit shall open a dedicated foreign exchange proceeds account to use its foreign exchange proceeds in the manner specified by the State Council (Article 18). Subject to the approval of SAFE, the insurance company may open offshore foreign exchange account(s) (Article 20). Qualified insurance agencies and brokerages may act as intermediaries for foreign exchange insurance business (Article 29). Commissions received by insurance agencies for such business shall be denominated in Renminbi unless otherwise approved by SAFE (Article 30). Brokerages may pay foreign exchange insurance premiums, indemnities or benefits for the account of their clients provided that they do not need to purchase foreign exchange. Their foreign exchange income from such business shall be settled annually and reported to local SAFE branches (Article 31).
Related legislation: PRC Insurance Law (Amended), Feb 28 2009, CLP 2009 No.3 p35; PRC Administration of Foreign Exchange Control Regulations (2nd Revision), Aug 5 2008, CLP 2008 No.8 p77; PRC Administration of Foreign-funded Insurance Companies Regulations, Dec 12 2001, CLP 2002 No.1 p39
Repealed legislation: Administration of the Foreign Exchange Business of Non-banking Financial Institutions Provisions, Jan 1 1993