Insurance Law of the People's Republic of China (2015Amendment)

Insurance Law of the People's Republic of China (2015Amendment) Insurance Law of the People's Republic of China (Adopted at the 14th session of the Standing Committee of the Eighth National People's Congress on June 30, 1995; amended for the first time at the 30th session of the Standing Committee of the Ninth National People's Congress on October 28, 2002, according to the Decision on Amending the Insurance Law of the People's Republic of China; revised at the 7th session of the Standing Committee of the Eleventh National People's Congress on February 28, 2009; amended for the second time at the 10th session of the Standing Committee of the Twelfth National People's Congress on August 31, 2014, according to the Decision of the Standing Committee of the National People's Congress on Amending Five Laws Including the Insurance Law of the People's Republic of China; and amended for the third time in accordance with the Decision on Amending Five Laws Including the Metrology Law of the People's Republic of China adopted at the 14th Session of the Standing Committee of the Twelfth National People's Congress on April 24, 2015) Contents Chapter I General Provisions Chapter II Insurance Contracts Section 1 General Rules Section 2 Personal Insurance Contracts Section 3 Property Insurance Contracts Chapter III Insurance Companies Chapter IV Rules of Insurance Operations Chapter V Insurance Agents and Insurance Brokers Chapter VI Supervision and Administration of the Insurance Sector Chapter VII Legal Liability Chapter VIII Supplemental Provisions Chapter I General Provisions Article 1 This Law is enacted for the purpose of regulating insurance activities, protecting the legitimate rights and interests of the parties to insurance activities, strengthening the supervision and administration of the insurance sector, maintaining the social and economic order and public interest, and promoting the sound development of the insurance sector. Article 2 In this Law, the term “insurance” means the commercial insurance activities where an insurance applicant pays an insurance premium to an insurer under an insurance contract and the insurer pays indemnity for the property loss caused by the occurrence of a potential incident specified in the insurance contract or pays insurance benefits when the insured dies, becomes disabled or sick or reaches a specified age, time limit or any other condition specified in the contract. Article 3 All insurance activities carried out within the territory of the People's Republic of China shall be governed by this Law. Article 4 Whoever carries out insurance activities must abide by the laws and administrative regulations and defer to social ethics, and shall not damage the public interest. Article 5 The parties to insurance activities shall follow the principle of good faith in their exercise of rights and performance of obligations. Article 6 Insurance business shall be carried out by insurance companies formed according to this Law or other insurance organizations as prescribed by laws and administrative regulations. No other entity or individual shall carry out insurance business. Article 7 Legal persons and other organizations within the territory of the People's Republic of China which need domestic insurance shall take out insurance from insurance companies within the territory of the People's Republic of China. Article 8 The insurance, banking, securities and trust sectors shall be segregated in operations and administration, and insurance companies, securities institutions and trust institutions shall be formed separately, except as otherwise specified by the state. Article 9 The insurance regulatory body under the State Council shall be responsible for the supervision and administration of the insurance sector according to the law. The insurance regulatory body under the State Council may set up local offices as needed for performing its duties. The local offices shall perform the duties of supervision and administration as authorized by the insurance regulatory body under the State Council. Chapter II Insurance Contracts Section 1 General Rules Article 10 An insurance contract means an agreement under which the insurance applicant and insurer agree upon the insurance rights and obligations. An insurance applicant means a person who enters into an insurance contract with an insurer and performs the obligation of paying an insurance premium under the insurance contract. An insurer means an insurance company which enters into an insurance contract with an insurance applicant and is liable for paying indemnity or insurance benefits under the insurance contract. Article 11 An insurance contract shall be concluded upon agreement between both parties after consultation, and the rights and obligations of both parties shall be determined according to the principle of fairness. An insurance contract shall be concluded voluntarily, unless the insurance is mandated by a law or administrative regulation. Article 12 An applicant for personal insurance shall, when entering into an insurance contract, have an insurable interest in the insured. The insured in property insurance shall have an insurable interest in the subject matter insured when an insured incident occurs. Personal insurance shall be a type of insurance which takes the life and body of human beings as the subject matter insured. Property insurance shall be a type of insurance which takes property and interests related thereto as the subject matter insured. An insured means a person whose property, life or body is covered by an insurance contract and who is entitled to claim the insurance money. An insurance applicant may be the insured. An insurable interest means a legally recognized interest owned by an insurance applicant or insured in the subject matter insured. Article 13 An insurance contract shall be formed after the insurance applicant applies for insurance and the insurer agrees to underwrite the insurance. The insurer shall issue an insurance policy or any other insurance certificate to the insurance applicant in a timely manner. The insurance policy or any other insurance certificate shall expressly state the provisions of the contract reached by both parties. Both parties may agree to state the provisions of the contract between them in any other written form. A legally formed insurance contract shall become effective upon formation. The insurance applicant and insurer may attach a condition or time limit for the effectiveness of the contract. Article 14 After an insurance contract is formed, the insurance applicant shall pay an insurance premium as agreed upon, and the insurer shall start to assume the insurance liability from the time as agreed upon. Article 15 After an insurance contract is formed, the insurance applicant may, but the insurer may not, rescind the contract, except as otherwise provided for by this Law or as otherwise agreed upon in the insurance contract. Article 16 Where the insurer inquiries about the subject matter insured or about the insured when entering into an insurance contract, the insurance applicant shall tell the truth. Where the insurance applicant fails to perform the obligation of telling the truth as prescribed in the preceding paragraph intentionally or for gross negligence, affecting the insurer's decision on whether to underwrite the insurance or raise the insurance premium, the insurer shall have the right to rescind the insurance contract. The right to rescind an insurance contract as prescribed in the preceding paragraph shall be annulled 30 days after the insurer knows the cause of rescission. Two years after an insurance contract is concluded, the insurer may not rescind the contract; and where an insured incident occurs, the insurer shall pay indemnity or insurance benefits. Where the insurance applicant intentionally fails to perform the obligation of telling the truth, the insurer shall not be liable for paying indemnity or insurance benefits for an insured incident which occurs before the contract is rescinded, and shall not refund the insurance premium. Where the insurance applicant fails to perform the obligation of telling the truth for gross negligence, materially affecting the occurrence of an insured incident, the insurer shall not be liable for paying indemnity or insurance benefits for an insured incident which occurs before the contract is rescinded, but shall refund the insurance premium. Where the insurer knows the truth which the insurance applicant fails to tell when they enter into an insurance contract, the insurer shall not rescind the contract; and if an insured incident occurs, the insurer shall pay indemnity or insurance benefits. An insured incident means an incident within the insurance coverage as agreed upon in an insurance contract. Article 17 Where an insurance contract is concluded using the standard clauses of the insurer, the insurer shall provide an insurance policy with the standard clauses attached and explain the contents of the contract to the insurance applicant. For those clauses exempting the insurer from liability in the insurance contract, the insurer shall sufficiently warn the insurance applicant of those clauses in the insurance application form, the insurance policy or any other insurance certificate, and expressly explain those clauses to the insurance applicant in writing or verbally. If the insurer fails to make a warning or express explanation thereof, those clauses shall not be effective. Article 18 An insurance contract shall include the following: (1) The name and domicile of the insurer. (2) The names and domiciles of the insurance applicant and insured and the name and domicile of the beneficiary in the case of personal insurance. (3) The subject matter insured. (4) The insurance liability and liability exemption. (5) The duration of insurance and the time of commencement of insurance liability. (6) The insured amount. (7) The insurance premium and the payment method. (8) The method for paying indemnity or insurance benefits. (9) The liabilities for breach of contract and the resolution of disputes. (10) The year, month and date when the contract is concluded. The insurance applicant and insurer may agree upon other insurance-related matters in the insurance contract. A beneficiary means a person designated by the insured or insurance applicant in a personal insurance contract to be entitled to claim the insurance money. An insurance applicant or insured may be a beneficiary. An insured amount means the upper limit of the indemnity or insurance benefits which the insurer is liable to pay. Article 19 The following clauses in an insurance contract which is concluded using the standard clauses of the insurer shall be null and void: (1) A clause exempting the insurer from any legal obligation or aggravating the liability of the insurance applicant or insured. (2) A clause excluding any legal right of the insurance applicant, insured or beneficiary. Article 20 The insurance applicant and insurer in an insurance contract may modify the contract upon consultation. To modify an insurance contract, the insurer shall endorse the insurance policy or any other insurance certificate or attach an approval slip thereto, or the insurance applicant and insurer shall enter into a written agreement on the modification. Article 21 After knowing the occurrence of an insured incident, the insurance applicant, insured or beneficiary shall notify the insurer in a timely manner. Where the insurance applicant, insured or beneficiary fails to do so intentionally or for gross negligence, which makes it difficult to determine the nature, cause, degree of damage, etc. of the insured incident, the insurer need not pay indemnity or insurance benefits for the undeterminable part, unless the insurer has known or should have known the incident in a timely manner through any other channel. Article 22 After an insured incident occurs, the insurance applicant, insured or beneficiary claiming indemnity or insurance benefits against the insurer under the insurance contract shall provide the insurer with all available certificates and materials related to the determination of the nature, cause, degree of damage, etc. of the incident. If the insurer deems that the relevant certificates and materials are incomplete according to the contract, it shall notify, in a timely manner and at one time, the insurance applicant, insured or beneficiary of all additional certificates and materials to be provided. Article 23 After receiving an insured's or beneficiary's claim for paying indemnity or insurance benefits, the insurer shall adjust the claim in a timely manner. If the circumstances are complex, the insurer shall complete the adjustment within 30 days, unless it is otherwise agreed upon in the insurance contract. The insurer shall notify the insured or beneficiary of the adjustment result. For a claim which falls within the insurance coverage, the insurer shall perform the obligation of paying indemnity or insurance benefits within 10 days after reaching an agreement on payment of indemnity or insurance benefits with the insured or beneficiary. If the insurance contract provides for a time limit for payment of indemnity or insurance benefits, the insurer shall perform the obligation of paying indemnity or insurance benefits as agreed upon. Where the insurer fails to perform the obligation as prescribed in the preceding paragraph, it shall, in addition to paying the insurance money, compensate the insured or beneficiary for any loss suffered therefrom. No entity or individual shall illegally intervene in an insurer's performance of the obligation of paying indemnity or insurance benefits or restrict an insured's or beneficiary's right to insurance money. Article 24 After completing the adjustment under Article 23 of this Law, for a claim which does not fall within the insurance coverage, the insurer shall, within three days after completing the adjustment, send a notice of its refusal to pay indemnity or insurance benefits to the insured or beneficiary, with reasons. Article 25 Where an insurer cannot determine the amount of indemnity or insurance benefits to be paid within 60 days after receiving a claim for indemnity or insurance benefits and the relevant certificates and materials, it shall first pay the amount which may be determined according to the available certificates or materials, and after it finally determines the amount of indemnity or insurance benefits to be paid, pay the difference. Article 26 The time limitation for an insured or beneficiary in insurance other than life insurance to claim indemnity or insurance benefits against the insurer shall be two years, which shall be counted from the day when the insured or beneficiary knows or should have known the occurrence of the insured incident. The time limitation for an insured or beneficiary in life insurance to claim indemnity or insurance benefits against the insurer shall be five years, which shall be counted from the day when the insured or beneficiary knows or should have known the occurrence of the insured incident. Article 27 Where the insured or beneficiary lies about the occurrence of an insured incident which actually never occurs, and claims indemnity or insurance benefits against the insurer, the insurer shall have the right to rescind the insurance contract and not to return the insurance premium. Where the insurance applicant or insured intentionally causes an insured incident, the insurer shall have the right to rescind the insurance contract, not to pay indemnity or insurance benefits, and subject to Article 43 of this Law, not to refund the insurance premium. Where, after the occurrence of an insured incident, the insurance applicant, insured or beneficiary fabricates the cause of incident or exaggerates the degree of damage by forging or altering the relevant certificates or materials or any other evidence, the insurer shall not be liable to pay indemnity or insurance benefits for the false part. Where the insurance applicant, insured or beneficiary commits any of the conduct as prescribed in the preceding three paragraphs, causing the insurer's payment of insurance money or expenses, the insurance applicant, insured or beneficiary shall refund the insurance money or compensate the insurer for expenses. Article 28 Reinsurance means that an insurer transfers a portion of its underwritten insurance business to other insurers in the form of cede insurance. At the request of the reinsurer, the cedant shall provide in writing the reinsurer with information on its own liabilities and the original insurance. Article 29 No reinsurer shall require the original insurance applicant to pay an insurance premium. Neither the insured nor the beneficiary in the original insurance may claim indemnity or insurance benefits against the reinsurer. No cedant shall refuse or delay the performance of its original insurance liability under the pretext that the reinsurer fails to perform the reinsurance liability. Article 30 Where there is any dispute between the insurer and the insurance applicant, insured or beneficiary over any clause of an insurance contract concluded using the standard clauses of the insurer, the clause shall be interpreted as commonly understood. If there are two or more different interpretations of the clause, the people's court or the arbitral institution shall interpret the clause in favor of the insured and beneficiary. Section 2 Personal Insurance Contracts Article 31 A insurance applicant shall have an insurable interest in any of the following persons: (1) Self. (2) Spouse, children, and parents of the insurance applicant. (3) Family members or close relatives other than those specified in the preceding paragraph with whom the insurance applicant has a relationship of support. (4) Workers who have labor relationships with the insurance applicant. In addition to the preceding paragraph, if the insured agrees that the insurance applicant enters into an insurance contract for the insured, the insured applicant shall be deemed to have an insurable interest in the insured. Where the insurance applicant does not have an insurable interest in the insured when entering into an insurance contract, the contract shall be null and void. Article 32 Where the insurance applicant falsely declares the age of the insured and the real age of the insured fails to meet the age requirement in the insurance contract, the insurer may rescind the contract, and refund the cash value of the insurance policy as agreed upon in the contract. An insurer's exercise of the right to rescind an insurance contract shall be subject to paragraphs 3 and 6 of Article 16 of this Law. Where the insurance applicant falsely declares the age of the insured and thus pays an insurance premium less than the due insurance premium, the insurer shall have the right to correct and require the insurance applicant to make up the unpaid insurance premium or to pay insurance money according to the proportion between the actually paid insurance premium and the due insurance premium. Where the insurance applicant falsely declares the age of the insured and thus pays an insurance premium more than the due insurance premium, the insurer shall refund the overpaid insurance premium to the insurance applicant. Article 33 No insurance applicant shall take out any personal insurance in which insurance money shall be paid conditioned upon the death of the insured for a person without the civil conduct capacity, and no insurer shall underwrite such insurance. Parents who take out personal insurance for their underage children shall not be subject to the preceding paragraph. However, the total insurance money paid for the death of the insured shall not exceed the limit as prescribed by the insurance regulatory body under the State Council. Article 34 Where an insurance contract takes death as the condition for payment of insurance money, and the insured has not consented thereto and recognized the insured amount, the contract shall be null and void. An insurance policy issued under a contract which takes death as the condition for payment of insurance money shall not be transferred or pledged without the written consent of the insured. Parents who take out personal insurance for their underage children shall not be subject to paragraph 1 of this Article. Article 35 An insurance applicant may pay an insurance premium to an insurer in a lump sum or in installments as agreed upon in the insurance contract. Article 36 Where an insurance contract provides that the insurance premium shall be paid in installments, and after paying the first installment of the insurance premium, the insurance applicant fails to pay the current installment of the insurance premium beyond 30 days after the day when the insurer sends a payment notice or beyond 60 days after the day as agreed upon, the validity of the contract shall be suspended, or the insurer may reduce the insured amount according to the contract, except as otherwise provided for by the contract. Where an insured incident occurs to the insured within the time limit mentioned in the preceding paragraph, the insurer shall pay insurance money according to the contract but may deduct the underpaid insurance premium from the insurance money. Article 37 Where the validity of an insurance contract is suspended under Article 36 of this Law, the validity of the contract may resume after the insurer and insurance applicant reach an agreement upon consultation and the insurance applicant makes up the underpaid insurance premium. However, if both parties fail to reach an agreement two years after the validity of the contract is suspended, the insurer shall have the right to rescind the contract. If the insurer rescinds the contract under the preceding paragraph, it shall refund the cash value of the insurance policy as agreed upon in the contract. Article 38 No insurer shall resort to litigation to require an insurance applicant to pay any premium for life insurance. Article 39 The beneficiary in personal insurance shall be designated by the insured or insurance applicant. The insurance applicant shall obtain the consent of the insured when designating the beneficiary. Where the insurance applicant takes out personal insurance for any worker who has a labor relationship with the insurance applicant, the insurance applicant shall not designate any person other than the insured or a close relative thereof as the beneficiary. For an insured without the civil conduct capacity or with limited civil conduct capacity, his or her guardian may designate the beneficiary. Article 40 The insured or insurance applicant may designate one or more beneficiaries. If there are two or more beneficiaries, the insured or insurance applicant may determine the sequence and shares of the beneficiaries; if the shares of the beneficiaries are not determined, all beneficiaries shall equally enjoy the beneficiary right. Article 41 The insured or insurance applicant may change a beneficiary but shall notify the insurer in writing. The insurer shall endorse the insurance policy or any other insurance certificate or attach an approval slip thereto after receiving the written notice. To change a beneficiary, the insurance applicant must obtain the consent of the insured. Article 42 After the death of the insured, under any of the following circumstances, the insurance money shall be deemed the legacy of the insured, and the insurer shall perform the obligation of paying insurance money according to the Succession Law of the People's Republic of China: (1) No beneficiary is designated or the beneficiary is not clearly designated and cannot be determined. (2) The designated beneficiary is survived by the insured and there is no other beneficiary. (3) The designated beneficiary legally loses or waives the beneficiary right and there is no other beneficiary. Where both the beneficiary and the insured die in the same incident, and it is impossible to determine their sequence of death, the beneficiary shall be presumed dead first. Article 43 Where the insurance applicant intentionally causes the death, injury, disability or illness to the insured, the insurer shall not be liable to pay insurance money. If the insurance applicant has paid insurance premium for two full years or more, the insurer shall return the cash value of the insurance policy to other right holders as agreed upon in the contract. Where the beneficiary intentionally causes the death, injury, disability or illness to the insured or attempts to murder the insured, the beneficiary shall lose the beneficiary right. Article 44 Where the insured in a contract which takes death as the condition for paying insurance money commits suicide within two years after the contract is formed or the validity of the contract resumes, the insurer shall not be liable to pay insurance money, unless the insured is a person without the civil conduct capacity at the time of suicide. Where the insurer is not liable to pay insurance money under the preceding paragraph, it shall refund the cash value of the insurance policy as agreed upon in the contract. Article 45 Where the insured is injured, disabled or dead for his or her intentional commission of a crime or resistance to any legally taken criminal compulsory measure, the insurer shall not be liable to pay insurance money. If the insurer has paid the insurance premium for two full years or more, the insurer shall refund the cash value of the insurance policy as agreed upon in the contract. Article 46 For the occurrence of an insured incident such as death, injury, disability or illness caused to the insured by the conduct of a third party, after the insurer pays insurance money to the insured or beneficiary, the insurer shall have no right to recover the money from the third party, but the insured or beneficiary shall still have the right to claim compensation against the third party. Article 47 Where the insurance applicant rescinds the contract, the insurer shall refund the cash value of the insurance policy as agreed upon in the contract within 30 days from the day of receipt of the notice of contract rescission. Section 3 Property Insurance Contracts Article 48 The insured which does not have an insurable interest in the subject matter insured when an insured incident occurs shall not claim indemnity against the insurer. Article 49 Where the subject matter insured is assigned, the assignee shall succeed to the rights and obligations of the insured. Where the subject matter insured is assigned, the insured or the assignee shall notify the insurer in a timely manner, except for a cargo transportation insurance contract or any contract as otherwise agreed upon. If the assignment of the subject matter insured greatly raises the degree of peril, the insurer may, within 30 days of receipt of the notice as mentioned in the preceding paragraph, increase the insurance premium or rescind the contract as agreed upon in the contract. If the insurer rescinds the contract, it shall refund the collected insurance premium to the insurance applicant after deducting the receivable part from the day of commencement of insurance li......