China Insurance Law · Judicial explanations issued by

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Last updated: June 16, 2019

China is considered as one of the growing insurancemarkets in the world in these days. In 2016, the China Insurance RegulatoryCommission (CIRC) issued the Outline of the 13th Five-YearDevelopment Plan of the Chinese Insurance Industry. The Outline defines theguiding ideology, development targets, priority missions and new policies inthe insurance market.The Chinese legal system is based on civil law system.These include the following:·        PRC Insurance Law·        Judicial explanations issued by Supreme People’s Court·        Other relevant laws developed by the National People’sCongress.·        Regulations and guidelines issued by the CIRC and otherrelevant government institutions.

The Insurance Regulation in China is intended toprotect the insured and beneficiaries under the policy and enhancing thedevelopment of the insurance market. CIRC has stressed the importance ofcompliance with the rules regarding:·        The market behaviors in the insurance industry.·        Promotion of insurance policies.·        The insurer’s solvency and capital adequacy ratio.

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·        Conduct rules concerning the market behavior of insuranceintermediaries.TheRegulatory Controlling BodiesThe China Regulatory bodiesare divided into governing body and provinces. The provinces are allowed todevelop and accept laws that are intended for only that province and have localstatus.Regulationof insurance and reinsurance contractsThere are some differencesbetween Insurance and Reinsurance contracts. An insurance contract is anagreement between an applicant and an insurer that sets out the rights andobligations under the insurance policy. “Reinsurance contract” is not definedby the PRC Insurance Law.

The difference is caused by the difference of thecontractual parties. The Insurance contract is between an applicant and aninsurer, while reinsurance is between two insurers. Therefore, the insurancecontract is based on property or life insurance and the reinsurance contractreinsures some part of the risk of other insurance contract.

Regulationsof Insurers and ReinsurersAll insurers and reinsurersare treated in the same way and they should comply to the same rules that arecarefully developed by the CIRC. Still, there are some other regulations for reinsurancecompanies that must be considered as well.Regulationsfor the insurance and reinsurance intermediariesThe agents’ actions must comply with the CIRC regulations andreports. The regulations include:·        Change of its name or the name ofits branches.

·        Change of its domicile or the placeof business of its branches.·        Change of the names of itsinitiators, major shareholders or capital contributors.·        Change of its major shareholders orcapital contributors.·        Material change to its equitystructure or proportion of capital contribution.·        Change of its registered capital orcapital contribution.

·        Modification of its articles ofassociation or partnership agreement.·        The division, merger or dissolutionof the entity, or changes to its organizational form.·        Closure of its branches.The maingeneral form and content requirements for insurance policiesThe PRC Insurance Law doesnot set specific form and content requirements for insurance policies.

Inpractice, an insurance contract in China consists of an application form,policy, schedule, and endorsements.InsuranceRegulations in GermanyThe German laws governing the insurance intermediationactivities were changed in 2007. These changes were conditioned by the EUInsurance Mediation Directive, which was implemented in accordance with therelevant definitions and regulations.

There is no statutory definition of an insurancecontract. However, in numerous decisions, dating back as far as 1964, theGerman Federal Court held that an insurance agreement exists if the following requirementsare satisfied:·        A business promises, for value, to render a certainperformance if an uncertain agreed event occurs.·        The assumed risk is spread among numerous persons who aresubject to the same risk.·        The assumption of the risk by the insurer is based oncalculations following the law of large numbers.·        The assumption of the risk is the primary obligation underthe agreement.Insurance and reinsurance activities are primarilyregulated by the German Insurance Supervision Act, which contains licensing,continuing oversight, and liquidity and eligibility requirementsfor insurance providers. Against the background of the implementation of theDirective 2009/138/EC on the taking-up and pursuit of the business of insuranceand reinsurance(Solvency II Directive) in German law, the German Insurance Supervisory Act hasbeen amended with effect from 1 January 2016.

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