China Insurance Regulatory Commission, Circular on Matters Relevant to Implementing the Regulation of Insurance Companies by Category

Issued: December 30 2008

Main Contents: The China Insurance Regulatory Commission (CIRC) categorises insurance companies into types A, B, C and D based on the risk levels of the company including its solvency, corporate governance, application of funds and market activities (Article 1). The CIRC may impose the following regulatory measures on Type C companies including ordering an increase of capital, restriction on distribution of dividends to shareholders, and auction of assets or restriction on purchase of fixed assets; and restrictions on commercial advertisements and opening new branches. The CIRC may carry out rectification of, or take over, Type D companies (Article 3). The CIRC shall carry out a comprehensive evaluation and classification of insurance companies based on the audited data of the previous year at the beginning of each year, and shall decide on the relevant regulatory measures. It shall also carry out an evaluation each quarter and revise the annual evaluation results and regulatory measures accordingly (Article 4).