China Insurance Regulatory Commission, Guiding Opinions on Regulating the Governance Structure of Insurance Companies (Trial Implementation)

Issued: January 5 2006
Applicability: The Guiding Opinions shall apply to share system insurance companies. Other insurance companies and insurance asset management companies shall make reference to the Guiding Opinions for their implementation (Section Seven).

Main contents: Section One concerns reinforcing the obligations of major shareholders and Section Two strengthening the establishment of the board of directors. Insurance companies shall have at least two independent directors sitting on the board of directors, and the proportion of independent directors to members of the board of directors shall gradually increase to one-third or above. In order to practically increase the efficiency and quality of the board of directors, insurance companies shall establish at least an audit committee and a nomination and remuneration committee under the board of directors. Section Three concerns the function of the supervisory board and Section Four standardizing the operation of management. Insurance companies shall establish the position of compliance officer and personal insurance companies shall establish the position of actuary. Insurance companies shall establish the following functional departments: audit department, risk management department and compliance management department. Section Five concerns strengthening the administration of affiliated transactions and information disclosure. Material affiliated transactions of insurance companies shall be examined by the audit committee of the board of directors and reported to the board for approval. Section Six concerns the regulation of governance structure. Qualifications of shareholders of directors, supervisors and senior management personnel of insurance companies shall, in accordance with the provisions, be reported to the China Insurance Regulatory Commission for examination. The board of directors of insurance companies shall submit internal control evaluation reports, risk assessment reports and compliance reports to the China Insurance Regulatory Commission every year (Section Six).