The Fog Clears for Foreign-invested Insurance Companies: More Detailed Implementing Rules Issued

By Dr. Xu Guojian, Partner, Lü Guoming & Pek-Siang Tee, Boss & Young, Shanghai

On May 13 2004, the China Insurance Regulatory Commission (CIRC) promulgated the PRC Administration of Foreign-invested Insurance Companies Regulations Implementing Rules(中华人民共和国外资保险公司管理条例实施细则)(the Implementing Rules). The rules became effective on June 15 2004.

The PRC Administration of Foreign-invested Insurance Companies Regulations (Administrative Regulations) were promulgated by the State Council on December 12 2001 and became effective as of February 1 2002. The Administrative Regulations have played an important and positive role in the administration and supervision of foreign-invested insurance companies in China. By the end of April 2004, there were 38 foreign-invested insurance companies in China, which have a total of 65 business offices in China. As the basic statute directly aimed at the regulation of foreign-invested insurance companies, however, the Administrative Regulations only provide some rather vague principles on many issues regarding the administration and supervision of foreign-invested insurance companies, such as the proportion of foreign investment in foreign-invested insurance companies, the establishment of branch organizations, and the definitions of many key terms. The CIRC is authorized to set down detailed stipulations on all of these areas (see Articles 6, 8, 9, 11 and 14 of the Administrative Regulations). The CIRC has promulgated the Implementing Rules to offer solutions to problems that have arisen in practice, and for which the Administrative Regulations lack specific stipulations.