China Insurance Regulatory Commission, Circular on Strengthening the Administration of Investment-type Insurance Business of Property Insurance Companies
中国保险监督管理委员会关于加强财产保险公司投资型保险业务管理的通知
December 18, 2008 | BY
clpstaff &clp articles &Stricter criteria for sale of investment-type insurance by property insurance companies
Issued: November 20 2008
Effective: As of date of issuance
Applicability: The term “investment-type insurance products of property insurance companies” refers to insurance products that combine the functions of insurance and funds application. Property insurance companies manage the investment funds for the investment-type insurance products paid by the principal, withdraw insurance premiums and bear insurance liability according to the method stipulated by the contract, and pay the principal and the insured party the investment money and the returns derived. The principal and the insured party must be natural persons and not legal persons (Article 1).
Main Contents: Property insurance companies that sell investment-type insurance products shall fulfil the following criteria:
(1) the company has been in continuous operations for three complete financial years and has net profit after offsetting losses against gross profit in the most recent three financial years;
(2) the company has sound governance structure and internal administration systems, sound management systems for business, finance, policy documents and computer information, network security operation rules and information disclosure management systems, as well as a sound internal control structure and practical workflow for operation;
(3) the company has not been subjected to administrative penalty for violation of laws or regulations in the most recent three years;
(4) the company is not being investigated by the regulatory authority for suspected violation of laws or regulations or undergoing relevant rectification;
(5) the solvency of the company in the most recent four consecutive quarters shall be above 150%; and
(6) the company has an independent department for managing fund application and has established sound management systems for funds application and risk control (Article 3).
Where the solvency of a property insurance company at the end of the previous quarter is below 150%, the insurance company shall cease to sell investment-type insurance products and report the relevant details and the measures adopted to the China Insurance Regulatory Commission within five working days (Article 4). The sales period of investment-type insurance products shall be no longer than two years in general, and sales shall be limited to the branches in regions above county (Article 6). The rate of return for investment insurance products with predetermined returns shall not exceed 80% of the interest rate on bank fixed deposits during the same period (Article 8).
Related Legislation: PRC Insurance Law (Amended) , Feb 28 2009, CLP 2009 No.3 p.35; and Measures for the Administration of Insurance Clauses and Premium Rates of Property Insurance Companies, Nov 10 2005
clp reference:3900/08.11.20promulgated:2008-11-20effective:2008-11-20This premium content is reserved for
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