China Insurance Regulatory Commission, Circular on Matters Relevant to Further Improving the Actuarial System for Personal Insurance

For a personal term-life insurance, personal endowment insurance, personal lifetime insurance or personal care insurance product developed and sold by an insurance company, the ratio of the death benefit or care liability insured amount to the aggregate premiums paid or account value shall satisfy the following requirements:

(Article 1)

The ceiling on the valuation interest rate for a universal life insurance liability reserve shall be lowered by 0.5% to 3%. Personal insurance products that exceed the ceiling on the valuation interest rate shall be submitted to the China Insurance Regulatory Commission for examination and approval. The valuation interest rate for general personal insurance products shall remain unchanged at 3.5% (Article 3).

If an insurance company provides a policy loan service, such policy loan may not exceed 80% of the cash value of the policy or of the account value. An insurance company may not accept payment by credit card from a proposer of the premiums for personal insurance with a cash value or for repayment of a policy loan (Article 4).

Commencing from January 1 2019, the annual premium income of an insurance company derived from short and medium-term products may not exceed 50% of its total premium income for the year. In 2020 and 2021, this figure shall be further reduced to 40% and 30% (Article 6).

Issued: September 2 2016

Effective: as of date of issuance

Applicability: The sale of insurance products not complying with the requirements of this Circular shall all be put to a halt as of April 1 2017. In the case of inconsistency between previous relevant provisions issued by the China Insurance Regulatory Commission and this Circular, this Circular shall prevail (Article 8).

Main contents: The requirement in respect of the minimum ratio of the insured amount to the premiums or to the account value shall be increased from 105% to 120%. The requirement in respect of the ratio for the death benefit for the main age bracket for personal insurance products shall be increased from 120% to 160%.

For a personal term-life insurance, personal endowment insurance, personal lifetime insurance or personal care insurance product developed and sold by an insurance company, the ratio of the death benefit or care liability insured amount to the aggregate premiums paid or account value shall satisfy the following requirements: