Laws of the People's Republic of China

China Insurance Regulatory Commission

Order of China Insurance Regulatory Commission

No. 4

The Measures for the Administration of Insurance Clauses and Insurance Rates of Property Insurance Companies, which were adopted upon deliberation at the chairman's working meeting of China Insurance Regulatory Commission on November 3, 2005, are hereby promulgated and shall go into effect as of January 1, 2006.

Chairman of China Insurance Regulatory Commission Wu Dingfu

November 10, 2005

Measures for the Administration of Insurance Clauses and Insurance Rates of Property Insurance Companies

Chapter I General Provisions

Article 1

With a view to improving and strengthening the administration of insurance clauses and insurance rates of property insurance companies, and encouraging property insurance companies to make innovations, the present Measures are formulated in accordance with the Insurance Law of the People's Republic of China.

Article 2

For the purposes of the present Measures, the term "insurance company" shall refer to a property insurance company that is established upon the approval of the insurance regulatory institution and is lawfully registered.For the purposes of the present Measures, the term "branch of an insurance company" shall refer to a branch company directly managed by a property insurance company.For the purposes of the present Measures, the term "Insurance institutions" shall include the insurance companies and the branches thereof as referred to in the two preceding paragraphs.

Article 3

China Insurance Regulatory Commission (hereinafter referred to as CIRC) shall regulate the insurance clauses and insurance rates of insurance institutions according to law.

The local offices of CIRC (hereinafter referred to as the local offices) shall exercise their powers within the scope authorized by CIRC.

Article 4

An insurance institution shall submit its insurance clauses and insurance rates in accordance with the present Measures to CIRC or the local office for examination and approval or for record keeping.

Article 5

The regulation of insurance clauses and insurance rates shall be based on the principles of maintaining public interests and preventing unfair competition.

Article 6

The insurance clauses and insurance rates drafted by an insurance institution shall satisfy the following requirements:

(1)

The text thereof is clear in structure, accurate in wording, precise in expression, and easy to understand;

(2)

Complete in elements, being fair and not likely to infringe upon the legitimate rights and interests of the insured or damage public interests;

(3)

Conforming to laws, administrative regulations and relevant provisions of CIRC;

(4)

The insurance rates are rated in a reasonable way, and not likely to endanger the insurance company's solvency or impede fair market competition; and

(5)

Other requirements as prescribed by CIRC.

Article 7

An insurance company that has drafted insurance clauses and insurance rates shall strengthen their management and guard against risks.

An insurance company shall actively advance the popularization and standardization of its insurance clauses and insurance rates.

Chapter II Examination and Approval

Article 8

An insurance company shall submit to CIRC the insurance clauses and insurance rates of the following insurance products for examination and approval:

(1)

The insurance products which is mandatory under the law; and

(2)

Other insurance products which CIRC believes to involve public interests.

CIRC shall lawfully determine the scope of examining and approving insurance products, and may make adjustments according to the actual situation.

Article 9

An insurance company shall submit the following materials when applying for examination and approval of the insurance clauses and insurance rates:

(1)

The application documents;

(2)

The approval form in duplicate;

(3)

A text of the insurance clauses and insurance rates;

(4)

The explanatory materials on the insurance clauses and insurance rates, including the main features of the insurance clauses and insurance rates, and the analysis of market risks and operational risks;

(5)

The insurance rate actuarial report signed by the responsible actuary, which includes the actuarial hypothesis, methods, formulas and estimation process;

(6)

Responsible actuary's statement;

(7)

Legally responsible person's statement;

(8)

Electronic versions of all the submitted materials; and

(9)

Other materials as prescribed by CIRC.

Article 10

Where an insurance company plans to amend the approved insurance clauses or insurance rates, it shall submit the amended ones in accordance with the present Measures for examination and approval.

Where an insurance company reports the amended insurance clauses or insurance rates, it shall submit the reasons for the amendment and a comparative explanation on the original contents and the amended ones, in addition to the materials as prescribed in Article 9 of the present Measures.

Article 11

A branch of an insurance company may, within the scope as prescribed by CIRC, adjust the insurance rates that has been reported to CIRC by its parent company and approved by CIRC, provided that it gets the consent of the parent company before reporting the said insurance rates to the local office for approval.

Where a branch of an insurance company adjusts in excess of the scope as prescribed by CIRC the insurance rates that has been reported to CIRC by its parent company and approved by CIRC, the adjustment shall be reported by the parent company to CIRC for examination and approval.

Article 12

Where a branch of an insurance company report to the local office the insurance rates as prescribed in Paragraph 1 of the preceding article for examination and approval, it shall submit the formal documents approved by its parent company, in addition to the materials as prescribed in Article 9 of the present Measures.

Article 13

An insurance institution's insurance clauses and insurance rates which are subject to examination and approval may not be put into business operation until they have been examined and approved by CIRC or the competent local office.

Chapter III Record Keeping

Article 14

In case an insurance institution drafts insurance clauses and insurance rates for the insurance products other than those as prescribed in Article 8 of the present Measures, it shall, within 10 working days after putting them into business operation and use, report them to CIRC or the competent local office for the record.

Article 15

An insurance company shall report to CIRC its insurance clauses and insurance rates for the record, and submit the following materials for this purpose:

(1)

The record keeping form in duplicate;

(2)

The text of the insurance clauses and insurance rates;

(3)

Legally responsible person's statement;

(4)

Responsible actuary's statement;

(5)

Electronic versions of all the submitted materials; and

(6)

Other materials as prescribed by CIRC.

The branch of a foreign property insurance company shall submit its insurance clauses and insurance rates to the local office for the record.

Article 16

A branch of an insurance company may draft insurance clauses and insurance rates for the insurance products other than those as prescribed in Article 8 of the present Measures, or amend the insurance clauses and insurance rates which have been reported by its parent company for the record, but it must get the consent of the parent company and report the amended ones to the local office for the record.

Article 17

The branch of an insurance company shall, when reporting the insurance clauses and insurance rates to the local office for the record, submit the formal documents approved by its parent company in addition to the materials as prescribed in Article 15 .

Article 18

CIRC or the local office shall, within 20 working days as of the date of receipt of the materials reported for the record, deal with the matter in light of the following circumstances:

(1)

If the materials reported for the record are incomplete, it shall notify the insurance institution of the necessary materials to be supplemented within 10 working days;

(2)

If the materials reported for the record are complete or the insurance institution has supplemented all the necessary materials, CIRC or the local office shall number the record keeping form with its seal affix thereon. One copy of the record keeping form shall be kept in the archives, and the other copy shall be returned to the insurance institution.

Chapter IV Administration of Multiple Line Insurance Clauses and Insurance Rates

Article 19

An insurance institution may operate and use the approved or archived insurance clauses and insurance rates on a multiple line basis, and need not submit them for examination and approval or for the record.

Where an insurance institution put multiple line insurance clauses and insurance rates, into operation and makes amendments to the approved or archived insurance clauses and insurance rates, it shall re-submit them in accordance with the present Measures for examination and approval or for the record.

Where an insurance institution reports the multiple line insurance clauses and insurance rates for examination and approval or for the record, it shall, in addition to submitting the materials prescribed in the present Measures, report the names of the multiple line insurance clauses and insurance rates, and the specimens of the insurance policies.

Article 20

An insurance institution shall, if operating and using multiple line insurance clauses and insurance rates, separately list the insurance premiums, the amount insured or the limit of liability corresponding to each insurance clause.

Chapter V Legally Responsible Person and Responsible Actuaries

Article 21

An insurance company shall appoint a legally responsible person and a responsible actuary to respectively take charge of the legal and actuarial affairs concerning insurance clauses and insurance rates.

An insurance company shall provide the legally responsible person and the responsible actuary with information necessary for them to perform their work duties, and shall fully respect the legally responsible person's and the responsible actuary's professional opinions.

Article 22

The legally responsible person and responsible actuary appointed by an insurance company shall be subject to ratification by CIRC. If the legally responsible person or the responsible actuary is not ratified, CIRC or its local office shall not recognize the statement issued by him or any other relevant report signed thereby.

Where an insurance company rescinds the employment or entrustment relationship with the legally responsible person or the responsible actuary, the qualification of the legally responsible person or the responsible actuary shall be automatically invalidated.

Article 23

The legally responsible person as appointed by an insurance company shall satisfy the following requirements:

(1)

Having a domicile in China;

(2)

Having received the undergraduate education or above in law or having a Lawyer's Qualification Certificate or a Legal Profession Qualification Certificate;

(3)

Having the experiences in practicing domestic insurance or law for no less than three years;

(4)

Having no record of being imposed administrative sanction due to illegal practice within the past two years;

(5)

Having no record of criminal penalty; and;

(6)

Other conditions as prescribed by CIRC.

Article 24

Where an insurance company applies for ratification of the legally responsible person, it shall submit to CIRC the following materials:

(1)

The application form for verification of the qualification;

(2)

Photocopies of the identity certificate and domicile attestation of the candidate;

(3)

Photocopies of the educational certificate and professional qualification certificate of the candidate; and

(4)

Other materials as prescribed by CIRC.

Article 25

The conditions which the responsible actuary of an insurance company ought to meet, and the materials which an insurance company ought to submit to CIRC when applying for ratification of the responsible actuary shall be separately formulated by CIRC.

Article 26

The legally responsible person shall be responsible for issuing the statement on legal affairs, and assume the following responsibilities for the insurance clauses:

(1)

Ensuring that the insurance clauses comply with the Insurance Law of the People's Republic of China, other laws and administrative regulations, and the relevant provisions of CIRC;

(2)

Ensuring that the insurance clauses will not damage public interests or infringe upon the legitimate rights and interests of the policy holders, the insured or the beneficiaries;

(3)

Ensuring that the elements of the contract are complete, the wording is accurate, the language is intelligible, and the expression is precise; and

(4)

Other responsibilities as prescribed by CIRC.

Article 27

The responsible actuary shall be responsible for signing the actuarial report and issuing the responsible actuary's statement,, and shall assume the following responsibilities:

(1)

Ensuring that the contents of the actuarial report are complete;

(2)

Ensuring that the actuarial hypothesis and the actuarial method conform to the general actuarial principle and the relevant provisions of the CIRC;

(3)

Ensuring that the interest estimation method for the products that have interest demonstration conform to the general actuarial principle and the relevant provisions of the CIRC;

(4)

Ensuring that the insurance rates be rated in a reasonable way, and the result satisfy the principles of adequacy, suitability and fairness; and

(5)

Other responsibilities in actuarial respect as prescribed by the CIRC.

Chapter VI Regulation

Article 28

Where the approved or archived insurance clauses and insurance rates need to be amended, the insurance institution shall re-submit them for examination and approval or for the record in accordance with the present Measures.

Where a branch of an insurance company uses the parent company's insurance clauses and insurance rates that have been approved or archived by CIRC, it need not submit them for examination and approval or for the record.

Article 29

Where an insurance institution uses an insurance agreement to accept insurance, it shall submit the said agreement for examination and approval or for the record in accordance with the relevant provisions of the present Measures.

Article 30

Where an insurance company dissolves the employment or entrustment relationship with the legally responsible person or the responsible actuary, it shall report to CIRC in writing within 10 working days from the day when the employment or entrustment relationship is dissolved,.

Article 31

Where an insurance institution's archived insurance clauses or insurance rates are found in violation of Article 6 of the present Measures, the insurance institution shall be ordered by CIRC or the local office to make corrections or to stop operating or using them.

Chapter VII Legal Liabilities

Article 32

Where an insurance institution fails to submit for examination and approval, as required, the insurance clauses and insurance rates of an insurance product which ought to be submitted for examination and approval, it shall be ordered by CIRC or the local office to make corrections, and be imposed a fine of not less than 50,000 Yuan but not more than 300,000 Yuan; if the circumstances are serious, CIRC or the local office may restrict the insurance institution's business scope, order it to stop accepting new business, or revoke its insurance business license.

Article 33

Where an insurance institution commits any of the following acts, it shall be ordered by CIRC or the local office to make corrections, and shall, if failing to make corrections within a time limit, be imposed a fine of not less than 10,000 Yuan but not more than 100,000 Yuan:

(1)

It fails to submit for the record, as required, the insurance clauses and insurance rates of an insurance product which ought to be put on records;

(2)

It fails to submit the relevant reports, statements, documents or information as required.

Article 34

Where an insurance institution intentionally conceals relevant facts, provides false information, or refuses to provide truthful information when submitting the insurance clauses and insurance rates for examination and approval or for the record, or when submitting for ratification the information of the legally responsible person or the responsible actuary, it shall be ordered by CIRC or the local office to make corrections, and be imposed a fine of not less than 100,000 Yuan but not more than 500,000 Yuan; if the circumstances are serious, CIRC or the local office may restrict the said institution's business scope, order it to stop accepting new business, or revoke its insurance business license; if a crime is constituted, it shall be investigated for criminal liabilities according to law.

Article 35

The senior manager, legally responsible person or responsible actuary of an insurance institution who is held directly liable for any of the following acts, or other person held directly liable, shall be admonished by CIRC or the local office in light of the actual situation, be ordered to be dismissed or replaced, and be imposed a fine of not less than 20,000 Yuan but not more than 100,000 Yuan; if a crime is constituted, he shall be investigated for criminal liabilities according to law:

(1)

He fails to submit for examination and approval, as required, the insurance clauses and insurance rates of an insurance product which ought to be submitted for examination and approval;

(2)

He fails to submit for the record, as required, the insurance clauses and insurance rates of an insurance product which ought to be put on records;

(3)

He fails to submit the relevant reports, statements, documents or information as required;

(4)

He intentionally conceals relevant facts, provides false information, or refuses to provide truthful information when submitting the insurance clauses and insurance rates for examination and approval or for the record, or when submitting for ratification the information of the legally responsible person or the responsible actuary.

Article 36

Where an insurance institution's archived insurance clauses or insurance rates are found in violation of Article 6 of the present Measures, and the insurance institution fails to make corrections within a time limit or to stop operating or using them after being ordered by CIRC or the local office to do so, the insurance institution shall be imposed a fine of not less than 100,000 Yuan but not more than 500,000 Yuan; if the circumstances are serious, CIRC or the local office may restrict the said institution's business scope, order it to stop accepting new business, or revoke its permit for operating insurance business; any of the insurance institution's senior managers held directly liable and other persons held directly liable shall be admonished by CIRC or the local office in light of the actual situation, and be imposed a fine of not less than 20,000 Yuan but not more than 100,000 Yuan.

Article 37

Where a legally responsible person violates the provisions of Article 26 , or a responsible actuary violates the provisions of Article 27 , he shall be ordered by the CIRC to make corrections and be required to submit a written self-criticism; if he violates the abovementioned provisions for twice within two years, he may be admonished by CIRC in light of the actual situation, and be impose a fine of not less than 5000 Yuan; if he violates the abovementioned provisions for three times within two years, the insurance institution concerned shall be ordered by CIRC to dismiss him from the position or to replace him, and shall not ratify the qualification for the legally responsible person or the responsible actuary to him within 2 years as of finding his violation of the provisions.

Chapter VIII Supplementary Provisions

Article 38

CIRC and its local offices shall, in accordance with the procedures and time limit as prescribed in the Administrative Licensing Law of the People's Republic of China and the Measures of China Insurance Regulatory Commission for the Implementation of Administrative Licensing", accept, examine and make decisions on the applications filed by insurance institutions for administrative license on insurance clauses and insurance rates, the legally responsible person and the responsible actuary.

Article 39

The insurance clauses and insurance rates which were approved or archived prior to the implementation of the present Measures may continue to be used.Where the insurance institution intends to modify the insurance clauses and insurance rates as prescribed in the preceding paragraph, it shall re-submit them in accordance with the present Measures for examination and approval or for the record.

Article 40

The qualifications of the legally responsible persons and those of the responsible actuaries which were examined and recognized by CIRC prior to the implementation of the present Measures, shall continue to be effective.

Article 41

The administration of insurance clauses and insurance rates of the branches of foreign property insurance companies shall be governed by the provisions of the present Measures applicable to parent companies of property insurance companies.

The administration of policy-related export credit insurance clauses and insurance rates shall be governed by other relevant provisions of the state.

Article 42

The branches of property insurance companies established in China by insurance companies from Hong Kong, Macao or Taiwan shall be administered by making reference to the branches of foreign property insurance companies.

Article 43

The power and responsibility to interpret the present Measures shall remain with CIRC.

Article 44

The present Measures shall go into effect as of January 1, 2006. In case any of the relevant provisions promulgated by CIRC prior to the said date conflicts with the present Measures, the present Measures shall prevail; while for matters that are not covered in the present Measures, the previous provisions shall apply.

The Interim Provisions on the Administration of Property Insurance Clauses and Rates (Bao Jian Fa [2000] No. 149 ), the Circular on Record Keeping Administration of Property Insurance Clauses and Rates (Bao Jian Fa[2001] No. 120), the Circular on the Issue of Extending the Opening Area of Property Insurance Clauses (Bao Jian Fa [2002] No. 93), and the Circular on Relevant Issues on Adopting the Afterward Record Keeping System for Property Insurance Companies (Bao Jian Fa [2004] No. 34) shall be abolished simultaneously.