China Insurance Regulatory Commission, Guiding Opinions on Launching Pilot Projects for Senior Housing Reverse Mortgage Endowment Insurance

1. having been in business for at least five years and having registered capital of not less than Rmb2 billion; and

2. satisfying provisions for the administration of the solvency of insurance companies, with a solvency adequacy ratio of not less than 120% at the end of the year preceding the application to participate in the pilot project and at the end of the most recent quarter (Article 3).

An insurance company shall expressly specify in the insurance contract the time of commencement and length of the cooling-off period, the customer's rights during the cooling-off period and the losses that the customer could incur if he or she terminates the contract during the cooling-off period. The cooling-off period may not be shorter than 30 calendar days (Article 4).

The proposer cohort shall be seniors of at least 60 years of age who have unblemished title to premises. The cities participating in the pilot project shall be Beijing, Shanghai, Guangzhou and Wuhan.

During the pilot period, the total appraised value of the mortgaged real property accepted by any one insurance company participating in the pilot project may not exceed: 4% × the portion of total assets as at the end of the previous year not exceeding Rmb20 billion + 0.2% × the portion of total assets as at the end of the previous year exceeding Rmb20 billion (Article 6).

Issued: June 17 2014

Effective: July 1 2014 to June 30 2016

Applicability: Reverse mortgage endowment insurance is an innovative commercial endowment insurance product that combines a residential mortgage and lifetime pension insurance, that is to say that a senior who has unblemished title to premises mortgages his or her real property to an insurance company, continues to have the right to occupy, use, benefit from and, subject to the consent of the mortgagee, dispose of, the premises, and receive a pension until death in accordance with the agreed upon conditions. Once the senior passes away, the insurance company secures the right to dispose of the mortgaged real property, the proceeds of which are used, on a priority basis, to cover the endowment insurance related expenses.

Main contents: An insurance company that applies for pilot project qualifications shall satisfy conditions, including:

1. having been in business for at least five years and having registered capital of not less than Rmb2 billion; and

2. satisfying provisions for the administration of the solvency of insurance companies, with a solvency adequacy ratio of not less than 120% at the end of the year preceding the application to participate in the pilot project and at the end of the most recent quarter (Article 3).

An insurance company shall expressly specify in the insurance contract the time of commencement and length of the cooling-off period, the customer's rights during the cooling-off period and the losses that the customer could incur if he or she terminates the contract during the cooling-off period. The cooling-off period may not be shorter than 30 calendar days (Article 4).

The proposer cohort shall be seniors of at least 60 years of age who have unblemished title to premises. The cities participating in the pilot project shall be Beijing, Shanghai, Guangzhou and Wuhan.

During the pilot period, the total appraised value of the mortgaged real property accepted by any one insurance company participating in the pilot project may not exceed: 4% × the portion of total assets as at the end of the previous year not exceeding Rmb20 billion + 0.2% × the portion of total assets as at the end of the previous year exceeding Rmb20 billion (Article 6).