专家点评| 保监会关于加强非法销售境外保险产品监管动态

Backgrounds

Foreign insurance policies, advertised as having ”lower premiums, higher yield, and less exclusions”, have attracted a lot of Mainland Chinese residents. 

China Insurance Regulatory Commission (hereinafter “CIRC”) prohibits illegal insurance activities conducted by insurance institutions without CIRC’s approval or authorization, illegal insurance intermediary activities conducted by any organizations or individuals without approval of CIRC, etc. 

Recently, not only has the State Administration of Foreign Exchange (hereinafter “SAFE”) placed a new interpretation on the condition of purchasing foreign insurance policies by Chinese residents, but CIRC has issued significant supervisions on the potential risks and impacts of foreign insurance policies, in both April and May, 2016.

The following content introduces the latest supervision measures released by the CIRC.

The Latest Supervision Measures

The CIRC issued the “Reminder of Risks Recently Arising out of the Purchase of Foreign Insurance Products by Chinese Residents” (promulgating date: 04/22/2016, hereinafter “Reminder”) and the “Notice of Strengthening Supervision against the Illegal Sale of Foreign Insurance Products” (Bao Jian Shou Xian〔2016〕No.46, hereinafter “Notice” ), in particular to roll out the risk warning and to reinforce supervision measures on the purchase of foreign insurance policies outside of China by Chinese residents.

I.The Risk Warning against becoming policyholders:

(I) Foreign insurance policies are not under the protection of PRC laws

To purchase Hong Kong insurance policies, Chinese residents should go to Hong Kong and sign relevant contracts in Hong Kong. In this situation, the insurance policies are governed by Hong Kong laws. 

If Chinese residents purchase Hong Kong insurance policies in Mainland China, such insurance policies are not under the protection of either PRC laws or Hong Kong laws.

(II) The uncertainty of exchange rate, foreign exchange policy and yield rate frequently arises among foreign insurance policies

Foreign insurance policies are usually settled in Hong Kong dollars, US dollars, etc. Insurance applicants would bear all of the exchange rate risk themselves. 

Additionally, both life insurance policies and investment return insurance policies are capital item transactions with foreign exchange limitations imposed by SAFE. It is uncertain to pay insurance premiums and receive benefits on schedule. Uncertain yield rate of foreign investment return insurance policies is also a concern.

(III) Foreign insurance policies carry potential risks for triggering contractual disputes

As a result of discrepancies in the regulatory meaning and wording of insurance clause, the understanding of foreign insurance clauses could be ambiguous, and foreign insurance policies are likely to trigger contractual disputes between contracting parties.

II.The reinforcement of supervision measures on insurance intermediaries:

(I) Strengthening the crackdown on and punishment of relevant organizations such as consulting companies, financial management companies and insurance intermediaries and relevant individuals that receive benefits from foreign organizations and promote, advertise, arrange and/or solicit investment in foreign insurance products within China and/or facilitate foreign insurance transactions in the manner of being “introduced in China, signed outside China”.

(II) Strengthening the accountability of insurance agencies, insurance intermediaries and insurance companies assisting in the illegal sale of foreign insurance products.

(III) All CIRC branches shall establish a supervision cooperation system and promptly report the investigation result to the CIRC, which will execute measures against the illegal sale of foreign insurance products.

(IV) All CIRC branches shall coordinate with the local authorities such as public security departments, industry and commerce bureaus, branches of the People's Bank of China and SAFE, to jointly govern and tackle the said illegal acts.

Impacts

Based on the “Reminder” and “Notice” issued by CIRC, the domestic organizations such as consulting companies, financial management companies and insurance intermediaries and relevant individuals shall not give talks on products, hold financial management conference and/or talks, etc to promote, advertise, arrange and/or solicit for the investment of foreign insurance product in China and/or assist the illegal sale of foreign insurance products on behalf of foreign insurance organizations who are not permitted by CIRC to conduct insurance activities within China; the Chinese residents are encouraged to recognize the potential risks in purchasing foreign insurance products and to avoid purchasing such products to protect their interests and rights.

The lead author

Zhan Hao, Managing Partner of AnJie Law Firm, LL.B. and LL.M in Wuhan University, participator in the China-EU Judiciary and Legal Cooperation program undertook by Ministry of Commerce and Ministry of Justice of P.R.C, PhD in Peking University and Post Doctor researcher on microeconomics at Tehua Post Doctor Workstation.

Dr. Zhan Hao is rated as the key individual of “Band 1”law firm in Competition/Antitrust field in 2012 and the his insurance team was rated as “Band 1”law firm in Insurance field in consecutive three years since 2010 by  Chambers and Partners. Dr Zhan was awarded as the best Antitrust lawyer of China in 2010 by Expert Guide, in 2012 by Practical Law Company(“PLC”)and the World's Leading Insurance & Reinsurance Lawyer in 2012 by Who’s Who Legal.

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