(Adopted at the 14th Meeting of the Standing Committee of the Eighth National People’s Congress on June 30, 1995, promulgated by Order No. 51 of the President of the People’s Republic of China, and amended in accordance with the Decision on Amending the Insurance Law of the People’s Republic of China adopted at the 30th Meeting of the Standing Committee of the Ninth National People’s Congress on October 28, 2002)

Contents

Chapter I General Provisions

Chapter II Insurance Contracts

Section 1 General Provisions

Section 2 Contract of Property Insurance

Section 3 Contract of Insurance of the Person

Chapter III Insurance Company

Chapter IV Rules Governing Insurance Business

Chapter V Supervision and Control of the Insurance Industry

Chapter VI Insurance Agents and Brokers

Chapter VII Legal Liabilities

Chapter VIII Supplementary 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 involved, strengthening supervision and control of the insurance industry and promoting its healthy development.

Article 2 The term of the “insurance” as used in this Law refers to a commercial insurance transaction whereby an insurance applicant, as contracted, pays insurance premiums to the insurer, and the insurer bears an obligation to indemnify him for property loss or damage caused by the happening of a contingent event that is agreed upon in the contract, or to pay the insurance benefits when the insured person dies, is injured or disabled, suffers illness or reaches the age or time-limit agreed upon in the contract.

Article 3 Insurance activities conducted within the territory of the People’s Republic of China shall be governed by this Law.

Article 4 Insurance activities shall be conducted in compliance with laws and administrative rules and regulations, with respect for public morality and on the principle of voluntary participation.

Article 5 In exercising their rights and performing their obligations, the parties to insurance activities shall follow the principle of good faith.

Article 6 Commercial insurance business must be conducted by insurance companies established in accordance with this Law; and no other entities or individuals may be permitted to operate commercial insurance business.

Article 7 Any legal persons or other organizations within the territory of the People’s Republic of China that need insurance coverage within the People’s Republic of China shall for the purpose thereof apply to insurance companies established within the territory of the People’s Republic of China.

Article 8 Insurance companies shall observe the principle of fair competition in developing insurance business and shall not engage in unfair competition.

Article 9 The insurance supervision and control authority under the State Council shall be responsible for supervision and control of the insurance industry in accordance with this Law.

Chapter II

Insurance Contracts

Section 1

General Provisions

Article 10 An insurance contract is an agreement whereby the rights and obligations pertaining to insurance are specified and agreed by the applicant and the insurer. The applicant means the party who enters into an insurance contract with an insurer and is obligated to pay the premiums under the insurance contract. The insurer means the insurance company, which enters into an insurance contract with an applicant and is obligated to make indemnity or pay insurance benefits.

Article 11 In concluding an insurance contract, the applicant and the insurer shall abide by a fair, mutually beneficial, consultative and voluntary principle and shall not infringe upon public interests of society. Insurance companies and other entities shall not constrain others to enter into insurance contracts, except for such insurances as have been made compulsory by laws and administrative rules and regulations.

Article 12 An applicant shall have an insurable interest in the subject matter of the insurance. An insurance contract is null and void if the applicant has no insurable interest in the subject matter of the insurance. Insurable interest means the legally recognized interest, which the applicant has in the subject matter of the insurance. The subject matter of the insurance refers, as regards the object of the insurance, either to the property of the insured and related interests associated therewith, or to the life and the person of the insured.

Article 13 An insurance contract is formed when an applicant applies for and the insurer accepts insurance under the terms and conditions agreed therefore by both parties. The insurer shall issue to the applicant in good time, an insurance policy or other insurance certificate, which indicates the terms and conditions as agreed upon by both parties. An insurance contract may take other written form than as prescribed in the preceding paragraph upon mutual agreement of the applicant and the insurer.

Article 14 Once an insurance contract is formed, the applicant shall pay the premium in accordance with the terms of the contract and the insurer shall begin to undertake the insurance liability from the time agreed upon.

Article 15 Unless otherwise stipulated in this Law or agreed in the insurance contract, the applicant may rescind the contract after it is formed.

Article 16 Unless otherwise stipulated in this Law or agreed in the insurance contract, the insurer may not rescind the contract after it is formed.

Article 17 In concluding an insurance contract, the insurer shall explain the contract terms to the applicant and may inquire about the subject matter of the insurance or relevant circumstances concerning the insured. The applicant shall make an honest disclosure. The insurer shall have the right to rescind the insurance contract, if the applicant intentionally conceals the facts and does not perform his obligation of making an honest disclosure, or negligently fails to make disclosure, thereby materially affecting the insurer making a decision whether or not to provide the insurance or whether or not to increase the premium rate. If an applicant intentionally fails to perform his obligation of making an honest disclosure, as regards the insured event, which occurs prior to the rescission of the contract, the insurer shall bear no obligation for indemnification or payment of the insured amount, or for returning the premiums paid. If an applicant negligently fails to perform his obligation of making an honest disclosure and this has a material effect on the occurrence of an insured event, the insurer shall, in connection with the insured event which occurred prior to the rescission of the contract, bear no obligation for indemnification or payment of the insured amount but may return the premiums paid. The insured event means an event falling within the scope of cover under the insurance contract.

Article 18 If there are exclusion clauses provided by the insurer in the insurance contract, then the insurer shall make precise and clear explanations in respect thereof to the applicant when concluding the insurance contract, otherwise such clauses shall have no effect.

Article 19 An insurance contract shall contain the following particulars: (1) name and address of the insurer; (2) names and addresses of the applicant and the insured, and name and address of the beneficiary in case of insurance of the person; (3) subject matter of the insurance; (4) scope of cover and exclusions; (5) period of insurance and commencement of liability of the insurer; (6) insured value; (7) amount insured; (8) premium and way of its payment; (9) way of payment of indemnity or insurance benefits; (10) liability arising from breach of contract and resolution of disputes; and (11) day, month and year of the conclusion of the contract.

Article 20 The applicant and the insurer may include other particulars for matters relating to the insurance contract besides those stipulated in the preceding article.

Article 21 During the period of validity of the insurance contract, the applicant and the insurer may amend the contents of the insurance contract subject to mutual agreement. Where amendments to the insurance contract are made, the insurer shall endorse them in the original policy or other insurance certificates, or affix an endorsement slip thereto, or have a written agreement of amendment made with the applicant.

Article 22 The applicant, the insured or the beneficiary shall, in good time, notify the insurer the occurrence of an insured event soon after they knew it. The insured refers to one whose property or person is protected by the insurance contract and who is entitled to claim for the insured amount. The applicant may also be the insured. The beneficiary with respect to insurance of the person refers to the one who, designated by the insured or the applicant, is entitled to claim for the insurance benefits. The applicant or the insured may also be the beneficiary.

Article 23 Where a claim for indemnity or payment of insurance benefits is lodged with the insurer after the occurrence of the insured event, the applicant, the insured or the beneficiary shall, to the best of their ability, provide the insurer with evidence and other material relevant to ascertaining the nature, the cause and the extent of the loss. Based on the provisions of the insurance contract, the insurer, in considering the relevant evidence or other material incomplete, shall notify the applicant, the insured or the beneficiary to provide supplementary evidence or other material.

Article 24 The insurer shall, after receipt of a claim for indemnity or for payment of the amount insured from the insured or the beneficiary, determine the matter without delay, and inform the insured or the beneficiary of the result of the determination. Where responsibility lies with the insurer, the insurer shall fulfill its obligation for such indemnity or payment within 10 days after agreement is reached with the insured or the beneficiary on the amount of such indemnity or payment. If there are stipulations in the insurance contract on the sum insured and on the period within which indemnification or payment should be made, then the insurer shall fulfill its obligation accordingly. If the insurer fails to fulfill its obligations as prescribed in the preceding paragraph in a timely manner then, in addition to payment of the amount insured, the insurer shall compensate the insured or the beneficiary for any damage incurred thereby. No entity or individual may illegally interfere with the insurer’s fulfillment of its obligation for indemnification or payment of the insured amount, or restrict the right of the insured or the beneficiary to receive such payments. The sum insured refers to the maximum amount, which the insurer undertakes to pay for indemnity or for its insurance obligations.

Article 25 After receiving a claim for indemnity or payment of the sum insured from the insured or the beneficiary, the insurer shall send to the insured or the beneficiary, a notice declining indemnity or payment of the sum insured for events not falling within the scope of cover.

Article 26 If the amount of indemnity or of the payment of insurance benefits cannot be determined within 60 days of receipt of a claim for indemnity or for payment of insurance benefits, together with relevant evidence and information in respect thereof, the insurer shall first effect primary payment of the minimum amount which can be determined by the evidence and material in hand. The insurer shall accordingly pay the balance after the amount of indemnity or of the payment of insurance benefits is finally determined.

Article 27 With respect to insurance other than life insurance, the right of the insured or the beneficiary to claim for indemnity or payment of insurance benefits shall lapse if the insured or the beneficiary fails to exercise such right within two years from the date the insured or the beneficiary is aware of the occurrence of the insured event. With respect to life insurance, the right of the insured or the beneficiary to claim for payment of insurance benefits shall lapse if the insured or the beneficiary fails to exercise such right within five years from the date the insured or the beneficiary is aware of the occurrence of the insured event.

Article 28 The insurer is entitled to terminate the insurance contract and not to refund the premiums if the insured or the beneficiary lies that an insured event has occurred, and submits a claim for indemnity or payment of insurance benefits, although such insured event has not occurred. If the applicant, the insured or the beneficiary fabricates the occurrence of an insured event on purpose, the insurer is entitled to terminate the insurance contract, and to bear no obligation for indemnity or payment of insurance benefits, and except as otherwise provided in the first paragraph of Article 65 of this Law, not to refund the premiums either. If the applicant, the insured or the beneficiary, following the occurrence of an insured event, fabricates the cause of the occurrence of the insured event or exaggerates the extent of the loss with forged or altered relevant evidence, information or other proofs, then the insurer shall bear no obligation for indemnity or payment of insurance benefits for the portion which is fabricated or exaggerated. The applicant, the insured or the beneficiary shall refund to, or indemnify the insurer for the purpose, payments of insurance benefits or expenses incurred by the insurer due to the commission of any of the acts stipulated in the foregoing three paragraphs of this Article by the applicant, the insured or the beneficiary.

Article 29 Reinsurance means the assignment by an insurer of part of its accepted business to another insurer assuming the form of a contractor. At the request of the reinsurance assignee, the insurance assignor shall inform the former of its own liability and all relevant information with respect to the original insurance.

Article 30 The reinsurance assignee shall not demand payment of premiums by the applicant of the original insurance. The insured or the beneficiary of the original insurance shall not lodge claims with reinsurance assignee for indemnity or payment of insurance benefits. The reinsurance assignor shall not decline or delay fulfilling its own original obligations by reason of the non-performance of the obligations of reinsurance assignee.

Article 31 If there is any dispute between the insurer and the applicant, the insured or the beneficiary, over the clauses in an insurance contract, the People’s Courts or arbitration organizations shall interpret such disputed clauses in favor of the insured and the beneficiary.

Article 32 The insurer or the reinsurance assignee shall be obligated to keep confidential all information obtained in the course of conducting insurance business regarding the business, financial position and individual privacy of the applicant, the insured, the beneficiary or the insurance assignor.

Section 2

Contract of Property Insurance

Article 33 A property insurance contract means a contract of which the subject matter of insurance is a piece of property and related interests associated therewith. A property insurance contract mentioned in this Section is referred to for short as “the contract” unless specified otherwise.

Article 34 Insurer must be notified of the assignment of the subject matter of insurance and after the consent of the insurer to continue the insurance, the original insurance contract shall be altered according to law, but except for cargo insurance contracts and those contracts having otherwise specified.

Article 35 A cargo insurance contract or an insurance contract for the carrier’s voyage shall not be terminated by the parties thereto subsequent to the commencement of insurance liability.

Article 36 The insured shall observe all controls of the State pertaining to such areas as fire prevention, safety, production operations and labour protection, to ensure safety of the subject matter of insurance. In accordance with the terms of the contract, the insurer may inspect the safety conditions of the subject matter of insurance and, make timely suggestions in writing to the applicant or the insured so as to eliminate unsafe factors and latent risks. In the event that the applicant or the insured fails to fulfill his contractual obligations to ensure the safety of the subject matter of insurance, the insurer has the right to ask for an increase in the premium or to terminate the contract. The insurer may, with the consent of the insured, take preventive measures to ensure the safety of the subject matter of the insurance.

Article 37 If the extent of risk attending the subject matter of insurance increases during the period of the contract, the insured shall, in accordance with the contract, notify the insurer in a timely manner, who shall have the right to ask for an increase in the premium or terminate the contract. If the insured fails to notify the insurer as stipulated in the preceding paragraph, the insurer shall bear no obligation for indemnification where the occurrence of the insured event is caused by the increased risk attending the subject matter of the insurance.

Article 38 Unless otherwise specified in the contract, the insurer shall reduce the premium and refund correspondingly the part thereof calculated on per diem basis in either of the following cases: (1) a change occurs in relative circumstances under which the insurance rate was determined, so that the risk attending the subject matter of the insurance is noticeably reduced; or (2) an obvious reduction occurs in the insurable value of the subject matter of the insurance.

Article 39 Where an applicant requests termination of the contract prior to commencement of insurance liability, the applicant shall pay service charges to the insurer and the insurer shall then refund the premiums paid. If the applicant requests termination of the contract subsequent to commencement of insurance liability, the insurer may retain the premiums for the period from commencement of insurance liability to the date of termination of the contract, and shall refund the balance of the premiums to the applicant.

Article 40 The insurable value of the subject matter of insurance may be agreed by the applicant and insurer and specified in the contract; or it may be determined, at the occurrence of the insured event, on the basis of the actual value of the subject matter of the insurance. The sum insured shall not exceed the insurable value; and the part in excess shall be null and void. Where the sum insured is less than the insurable value, the insurer shall bear obligation for indemnity pro rata of the sum insured to the insurable value, unless otherwise stipulated in the contract.

Article 41 In the event of double insurance, the applicant shall notify all insurers concerned of relevant information with respect to such double insurance. Where the amount in aggregate of the sum insured by double insurance exceeds the insurable value, the total amount of indemnity paid by all insurers concerned shall not exceed the insurable value. Unless specified otherwise in the contract, the insurers concerned shall undertake their respective obligation for indemnity in the proportion, which the sum insured by each of them bears to the total amount of the sum insured. Double insurance means such insurance wherein an applicant enters into separate insurance contracts with two or more insurers on the same subject matter of insurance, the same insurable interests and the same insured event.

Article 42 At the occurrence of an insured event, the insured is obligated to take all necessary measures to prevent or mitigate loss, or damage. The insurer shall bear all necessary and reasonable expenses incurred by the insured after the occurrence of the insured event in taking measures to prevent or mitigate loss or damage of the subject matter of the insurance; the amount of such expenses borne by the insurer shall be calculated separately from the indemnity for the loss of the subject matter of the insurance and it shall not exceed the sum insured in the maximum.

Article 43 In the event of partial loss of the subject matter of insurance, the applicant may terminate the contract within 30 days after indemnification by the insurer; unless specified otherwise in the insurance contract, the insurer may also terminate the contract. In the event that the insurer terminates the contract, the insurer shall notify the applicant 15 days in advance of such termination and refund to the applicant the premium for the portion of the subject matter of insurance which is not lost or damaged after deducting the earned premium for the subject matter of the insurance which is not lost or damaged from the date of the commencement of the insurance liability to the date of termination of the contract.

Article 44 After the occurrence of the insured event, if the insurer pays in full the sum insured which is equal to the insurable value, the insurer shall retain all rights pertaining to the lost or damaged subject matter of insurance; if the sum insured is less than the insurable value, the insurer shall obtain partial rights pertaining to the lost or damaged subject matter of insurance pro rata of the sum insured to the insurable value.

Article 45 When the occurrence of the insured event results from the loss or damage to the subject matter of insurance caused by a third party, the insurer may, from the date when indemnity is paid to the insured, exercise by subrogation the right of the insured to demand indemnification against the third party up to the amount of indemnity paid. After the occurrence of the insured event referred to in the preceding paragraph, the insurer may, when paying indemnity, deduct therefrom a corresponding amount, which the insured has received as indemnity from the third party. The right to indemnity by subrogation exercised by the insurer in accordance with the first paragraph shall in no way affect the insured’s right to indemnity against the third party for the portion un-indemnified.

Article 46 If the insured waives the right to indemnity against the third party after the occurrence of the insured event and before the insurer pays the indemnity, the insurer shall bear no obligation for indemnity. If the insured, without the insurer’s consent, waives the right to indemnity against the third party after indemnity is paid by the insurer, the waiver shall be invalid. The insurer may deduct a corresponding sum from the amount of indemnity if it is not able to exercise the right to indemnity by subrogation due to the fault of the insured.

Article 47 The insurer has no right to indemnity by subrogation against any family member or staff member of the insured unless the occurrence of the insured event referred to in the first paragraph of Article 45 above has resulted from the willful misbehavior of such a party.

Article 48 When the insurer exercises the right to indemnity by subrogation against a third party, the insured shall provide the insurer with necessary documents and relevant information known to him.

Article 49 The insurer shall bear all necessary and reasonable expenses incurred by the insurer and the insured for the purpose of investigating and ascertaining the nature and cause of the occurrence of the insured event, and the extent of loss or damage to the subject matter of the insurance.

Article 50 The insurer may, in accordance with the provisions of law or the terms of an insurance contract, directly indemnify a third party for loss or damage caused him by the insured of a liability insurance contract. Insurance liability means insurance of which the subject matter is the insurer’s liability to indemnify a third party according to law.

Article 51 If the insured of a liability insurance contract is brought to arbitration or legal proceedings due to the occurrence of an insured event which caused loss or damage to a third party, the insurer shall bear the cost of such arbitration or legal proceedings and other necessary and reasonable expenses paid by the insured, unless provided otherwise in the insurance contract.

Section 3

Contract of Insurance of the Person

Article 52 A contract of insurance of the person is an insurance contract of which the subject matter of insurance is a person’s life and body. The contract of insurance of the person mentioned in this Section is briefly referred to as “the contract”, unless specially designated.

Article 53 The applicant has insurance interest in the following persons: (1) the applicant himself; (2) the applicant’s spouse, children and parents; or (3) apart from the above-mentioned, other family members and close relatives bearing foster or support or maintenance relationship with the applicant. The stipulations in the preceding paragraph apart, the applicant shall be deemed as having an insurance interest in the insured, if the insured consent to the applicant concluding the contract for him.

Article 54 If the age of the insured is not correctly given by the applicant, and the actual age of the insured does not fall within the age limit specified by the contract, the insurer may terminate the contract and refund the premiums to the applicant after deducting service charge. However, this does not apply to cases where formation of the contract has been over two years. In the event that the applicant has wrongly given the age of the insured, thus causing him to underpay the premiums, the insurer shall have the right to rectify the mistake and demand the applicant to pay the balance, or when paying insurance benefits, reduce the payment in the proportion which the amount of premiums actually paid bears to the amount that should have been paid. In the event that the applicant has wrongly given the age of the insured, thus causing him to overpay the premiums, then the insurer shall refund the overpaid portion to the applicant.

Article 55 An applicant shall not apply for and the insurer shall not provide insurance of the person for one in want of capacity for civil acts, taking death as a condition for payment of insurance benefits. The restriction stipulated in the preceding paragraph does not apply to cases where parents apply for insurance of the person for their minor children. However, the total amount of payments for death shall not exceed the limit prescribed by the insurance supervision and control authority.

Article 56 A contract stipulating death as the term for payment of insurance benefits is not valid unless it is agreed to in writing by the insured with the amount of insurance approved by him. An insurance policy signed and issued pursuant to a contract prescribing death as the term for payment of insurance benefits may not be transferred or pledged without the written consent of the insured. Where parents apply for insurance of the person on their minor children, the restriction stipulated in paragraph one of this Article shall not apply.

Article 57 After the formation of the contract, the applicant may either pay the whole of the premiums once for all or pay by installments in accordance with the terms of the contract. If the contract stipulates that the premium is to be paid by installments, the applicant shall pay the first installment at the conclusion of the contract and the other installments as scheduled.

Article 58 Where the contract specifies payment of the premiums by installments and the applicant has paid the first installment but fails to pay the current installment despite the lapse of over 60 days from the scheduled date of payment, the validity of the contract is suspended, or the insurer may, in accordance with the terms of the contract, reduce the insured amount, unless stipulated otherwise in the contract.

Article 59 The validity of a contract that has been suspended in accordance with the preceding Article can be reinstated upon agreement therefor being reached between the insurer and the applicant and after the making of the outstanding premium payment by the applicant. However, the insurer is entitled to terminate the contract if no agreement has been reached by both parties within two years from the date of suspension of the validity of the contract. Where an insurer terminates the contract in accordance with the preceding paragraph when the applicant has paid the premiums for two years or more, the insurer shall refund the cash value of the policy in accordance with the contract. In the event that the applicant has paid the premiums for less than two years, the insurer shall refund the premiums with the service charge deducted therefrom.

Article 60 The insurer shall not resort to legal proceedings to demand payment by the applicant of the premiums in respect of insurance of the person.

Article 61 The beneficiary of the insurance of the person shall be designated by the insured or the applicant. The designation of the beneficiary by the applicant is subject to the approval of the insured. If the insured is a person with no capacity for civil acts or a person with limited capacity for civil acts, the beneficiary may be designated by his guardian.

Article 62 The insured or the applicant may designate one or more persons as the beneficiaries. In the event that there are more than one beneficiaries, the insured or the applicant may specify the order of priority in their enjoyment of the insurance benefits and their respective proportions; if such proportions have not been defined, all the beneficiaries shall share the insurance benefits in equal proportions.

Article 63 The insured or the applicant may change the beneficiary and notify the insurer of this in writing. The insurer shall endorse the change on the policy upon receipt of the notice. The change of the beneficiary by the applicant shall be subject to the consent of the insured.

Article 64 In the event of the death of the insured, the amount of insurance shall be treated as the deceased state, and the insurer shall, in any of the following circumstances, be obligated to pay insurance benefits to the legal heirs of the insured: (1) where there is no designated beneficiary; (2) where the beneficiary dies before the insured without other beneficiary being designated; or (3) where the beneficiary forfeits or surrenders his rights as such in accordance with law without any other beneficiary.

Article 65 When the applicant or the beneficiary has intentionally caused the death, disability or illness of the insured, the insurer shall bear no obligation to pay for the insurance. In the event that the applicant has paid premiums for two years or more, the insurer shall, in accordance with the contract, return the cash value of the policy to other beneficiaries, who are entitled to their rights as such. If the beneficiary has intentionally caused the death or disability of the insured, or attempted to cause the death of the insured, the beneficiary shall forfeit his right to claim insurance benefits.

Article 66 Where a contract stipulates death as the term for payment of the insurance benefits, then the insurer shall have no obligation to make such payment if the insured commits suicide, except for the stipulations in the second paragraph of this Article. However, the insurer shall, as regards the insurance premiums already paid by the applicant, return the cash value thereof in accordance with the insurance policy. Where a contract stipulates death as the term for payment of the insurance benefits, the insurer may effect such payment in accordance with the contract if the insured commits suicide two years or more after the formation of the contract.

Article 67 Where death or disability of the insured results from his intentional committing a crime, the insurer shall have no obligation to effect payment of the insurance benefits. If, however, the applicant has paid premiums for two years or more, the insurer shall return the cash value thereof to the insured in accordance with the insurance policy.

Article 68 Where insured events perils such as death, disability, or illness of the insured in insurance of the person result from acts of a third party, the insurer shall have no right of claim against the third party by subrogation after payment of the insurance benefits to the insured or the beneficiary. However, the insured or the beneficiary shall still have the right to demand compensation from the third party.

Article 69 Where an applicant who has already paid in full the insurance premiums for two years or more, terminates the contract, then the insurer shall return the cash value of the policy within 30 days after receipt of the notice of termination; if the applicant has paid the insurance premiums for less than two years, then the insurer shall, in accordance with the contract, return the premiums after deducting the service charge.