Search This Section
6 Aug 2015
On 22 July 2015, China Insurance Regulatory Commission (“CIRC”) promulgated the Interim Provisions for the Supervision of Internet Insurance Business (Bao Jian Fa  No.69, effective from 1 October 2015, the “Provisions”), addressing specific issues relating to the Internet insurance business, such as operating entities, operating conditions and regions, information disclosure, operating rules, supervision and administration. DaHui Lawyers, as an external expert advisor to CIRC, was deeply involved in the whole legislative process, including the drafting and modifications of the Provisions. DaHui closely followed the conception and publication process, by drawing upon the firm’s experience in Internet and finance and by providing a comparative analysis of legislation in mature Internet insurance jurisdictions, such as the United States, Germany, Japan, Taiwan and Hong Kong.
Currently, the PRC government is directing its attention towards legislating Internet finance. On 17 July, 10 ministries and commissions including CIRC promulgatedtheGuiding Opinions on Promoting the Healthy Development of Internet Finance (the “Guiding Opinions”), clarifying the principle of "lawful, moderate, classified, coordinated and innovative supervision and administration" for Internet finance business. The Provisions are the first regulatory rules made after the Guiding Opinions were issued and will certainly have a great influence on the development of the Internet insurance industry in China. The main contents of the Provisions are set out below.
The Provisions are applicable to insurance institutions and third-party network platforms. “Insurance institutions” refers to insurance companies and professional insurance intermediaries. “Third-party network platforms” refers to the network platforms (excluding network platforms self-managed by insurance institutions) that provide auxiliary services of network technical support for insurance consumers and insurance institutions during Internet insurance business activities. In accordance with the Provisions, none of the subsidiaries under categories of insurance companies and insurance group (holding) companies, insurance asset management companies, regional professional insurance intermediaries and insurance part-time agencies may operate Internet insurance businesses. In addition, the Provisions apply mutatis mutandis to the management of the sales of insurance products by insurance institutions through channels such as, inter alia, instant messaging tools, application software and social networking platforms.
Third-Party Network Platforms
The Provisions set specific instructions on third-party network platforms, including:
Lifting Restrictions on Operating Regions
The Provisions conditionally lift restrictions on operating regions of certain types of insurance, such as: (1) personal accident insurance, term life insurance and ordinary whole life insurance; (2) household property insurance, liability insurance, credit insurance and guarantee insurance with an individual as the policyholder or the insured; and (3) property insurance businesses with whole-process services including sales, underwriting and settlement of claims provided independently and completely via the Internet. Cross-region operation is prohibited as to other types of insurance except as stipulated in the Provisions. Meanwhile, insurance companies are required to guarantee the consumer’s right to know of the regions where there are no branches by notifying them directly. Regulatory authorities may, following multiple complaints, terminate the operation of relevant types of insurance institutions in the event that they cannot ensure after-sales claims services in different locations.
From the perspective of protecting consumers’ rights, the Provisions stipulate many obligations of operating entities, specifically, what and how to disclose and report if there are problems of incomplete or inadequate information, which may occur in the process of self-service transaction of internet insurance.
Overall, the Provisions stick to the principles determined by the Guiding Opinions and provide for development and regulation equally. The Provisions support and encourage Internet insurance innovation, while at the same time conducting appropriate supervision, thus promoting the healthy development of the Internet insurance business. Protecting consumers’ rights effectively is another basic principle supported by the Provisions. The Provisions strengthen regulation on information disclosure and customer service and lay a solid foundation for the further development of the Internet insurance business, protecting consumers’ rights to know and choose, in particular.