Regulation on Compulsory Auto Liability Insurance (2019 Revision)

Regulation on Compulsory Auto Liability Insurance (2019 Revision)

(Issued by Order No. 462 of the State Council of the People's Republic of China on March 21, 2006; revised for the first time in accordance with the Decision of the State Council to Amend the Regulation on Compulsory Auto Liability Insurance on March 30, 2012; revised for the second time in accordance with the Decision of the State Council to Amend the Regulation on Compulsory Auto Liability Insurance on December 17, 2012, by Order No. 630 of the State Council; revised for the third time in accordance with the Decision of the State Council to Amend Certain Administrative Regulations by Order No. 666 of the State Council on February 6, 2016; and revised for the fourth time in accordance with the Decision of the State Council to Amend Certain Administrative Regulations on March 2, 2019)

Chapter I General Provisions

Article 1 This Regulation is developed in accordance with the Road Traffic Safety Law of the People's Republic of China and the Insurance Law of the People's Republic of China for the purposes of ensuring the indemnification of victims in road motor vehicle traffic accidents according to the law and promoting road traffic safety.

Article 2 The owners or managers of motor vehicles driving on the roads within the territory of the People's Republic of China shall take out compulsory auto liability insurance in accordance with the provisions of the Road Traffic Safety Law of the People's Republic of China.

The insurance application, compensation, and regulation of compulsory auto liability insurance shall be governed by this Regulation.

Article 3 For the purposes of this Regulation, “compulsory auto liability insurance” means the compulsory liability insurance in which an insurance company compensates, within the limit of indemnity, the victims other than the persons in the insured motor vehicles and the insured for their bodily injuries or deaths and property losses arising from road traffic accidents involving the insured motor vehicles.

Article 4 The insurance regulatory authority of the State Council shall, according to the law, regulate the compulsory auto liability insurance business of insurance companies.

The traffic control divisions of the public security authorities and the departments of agriculture (farm machinery) (hereinafter collectively referred to as the “administrative departments of motor vehicles”) shall conduct supervisory inspection on motor vehicles' participation in compulsory auto liability insurance. The administrative departments of motor vehicles shall not register motor vehicles which have not participated in compulsory auto liability insurance, and the technical inspection institutions for motor vehicle safety shall not inspect such motor vehicles.

The traffic control divisions of the public security authorities and the traffic police shall, in the investigation and handling of road traffic safety illegal acts and road traffic accidents, check the insurance marks of compulsory auto liability insurance according to the law.

Chapter II Insurance Application

Article 5 Insurance companies may engage in compulsory auto liability insurance business.

To ensure the implementation of the compulsory auto liability insurance system, the insurance regulatory authority of the State Council shall have the authority to require insurance companies to engage in compulsory auto liability insurance business.

No entity or individual except insurance companies may engage in compulsory auto liability insurance business.

Article 6 Compulsory auto liability insurance shall adopt uniform insurance clauses and base premium rates. The insurance regulatory authority of the State Council shall approve premium rates under the principle of “no profit and no loss in general” in compulsory auto liability insurance business.

In the process of approving premium rates, the insurance regulatory authority of the State Council may retain relevant professional institutions to conduct assessment, and hold public hearings to solicit public opinions.

Article 7 An insurance company shall manage its compulsory auto liability insurance business separately from other insurance business, and conduct accounting separately.

The insurance regulatory authority of the State Council shall annually review the compulsory auto liability insurance business of insurance companies, and disclose the results to the public; and may require or allow insurance companies to adjust premium rates according to the profit or loss in general of the compulsory auto liability insurance business of insurance companies.

The insurance regulatory authority of the State Council shall hold a public hearing for relatively significant adjustment of premium rates.

Article 8 Where an insured motor vehicle is not involved in any road traffic safety illegal act or any road traffic accident, the insurance company shall reduce its premium rate in the following year. If, in the following years, the insured motor vehicle is still not involved in any road traffic safety illegal act or any road traffic accident, the insurance company shall continue to reduce its premium rate until the minimum standard. Where an insured motor vehicle is involved in any road traffic safety illegal act or any road traffic accident, the insurance company shall raise its premium rate in the following year. If the insured motor vehicle is involved in multiple road traffic safety illegal acts or road traffic accidents or is involved in any major road traffic accident, the insurance company shall significantly raise its premium rate. If the insured has no fault in road traffic accidents, the premium rate shall not be raised. The standards for reducing or raising premium rates shall be determined by the insurance regulatory authority of the State Council in conjunction with the public security department of the State Council.

Article 9 The insurance regulatory authority of the State Council, the public security department of the State Council, the agriculture department of the State Council, and other relevant departments shall gradually establish an information sharing system of compulsory auto liability insurance, road traffic safety illegal acts, and road traffic accidents.

Article 10 An insurance applicant shall choose an insurance company engaging in the compulsory auto liability insurance business when taking out the insurance, and the insurance company chosen shall not refuse to underwrite or delay underwriting the insurance.

The insurance regulatory authority of the State Council shall disclose to the public the insurance companies that engage in the compulsory auto liability insurance business.

Article 11 An insurance applicant shall, when taking out the insurance, honestly provide the insurance company with important information.

The important information shall include: the type, factory brand and model, identification number, license plate number, and nature of use of the motor vehicle, the name, sex, age, domicile, and identity card or driver's license number (or organization code) of the owner or manager of the vehicle, information on accidents involved with the motor vehicle before renewal of insurance, and other information prescribed by the insurance regulatory authority of the State Council.

Article 12 When a contract on compulsory auto liability insurance is concluded, the insurance applicant shall pay all the insurance premium in a lump sum; the in......