Chapter III

Insurance Company

Article 70 An insurance company shall take either of the following forms for its organization: (1) stock company with limited liability; or (2) solely State-owned company.

Article 71 The establishment of an insurance company is subject to the approval of the insurance supervision and control authority.

Article 72 To establish an insurance company, the following are required: (1) articles of Association in conformity with this Law and the Company Law; (2) a minimum registered capital as prescribed in this Law; (3) senior management personnel with professional knowledge and experience in business operations; (4) a sound organizational structure and management systems; and (5) business premises conforming to requirements and other facilities relative to the insurance business. When examining the application for the establishment of an insurance company, the insurance supervision and control authority shall take into consideration the development of the insurance industry and the need for fair competition.

Article 73 The minimum registered capital required for the establishment of an insurance company is RMB 200,000,000 yuan. The minimum registered capital for the establishment of an insurance company shall be fully paid-up in monetary form. The insurance supervision and control authority may adjust the amount of the minimum registered capital, in accordance with the proposed scope of business and scale of operations; however, the minimum capital shall not be less than that stipulated in the first paragraph of this Article.

Article 74 For the establishment of an insurance company, the applicant shall submit the following documents and material: (1) a formal written application giving therein the name, registered capital and the scope of business of the proposed insurance company; (2) a feasibility study report; and (3) other documents and information required by the insurance supervision and control authority.

Article 75 Where an application of the establishment of an insurance company has been approved in preliminary examination, the applicant shall begin preparations for its establishment in accordance with this Law and the Company Law. The applicant who meets the requirements of establishment stipulated in Article 71 of this Law shall submit to the insurance supervision and control authority a formal completed form of application together with the following documents and material: (1) articles of Association of the insurance company; (2) a list of shareholders and their shares, or the investors and the amount of their investment; (3) a certificate of the credit standing and relevant information of those shareholders holding 10% or more of the company's shares; (4) a certificate verifying the paid-up capital issued by a statutory institution; (5) resumes and proofs of qualification of proposed senior management personnel; (6) operation strategy and business plan; (7) details of business premises and other facilities related to the insurance business; and (8) other documents and material requested by the insurance supervision and control authority.

Article 76 The insurance supervision and control authority shall make a decision approving or disapproving the application, within six months from the date of receipt of the formal application to establish an insurance company.

Article 77 An insurance company whose establishment has been approved shall be issued by the approving department a license to carry on insurance business, which shall be used to affect registration with and obtain a business license from the administrative department of industry and commerce.

Article 78 The license to carry on insurance business will be invalidated of itself if the insurance company fails to complete its registration without any proper reasons, within six months from the date of receipt of the insurance license.

Article 79 Upon its establishment, an insurance company shall deposit 20% of its total registered capital with a bank designated by the insurance supervision and control authority as guarantee fund; this guarantee fund shall not be used except for repayment of debts when the company is liquidated.

Article 80 An insurance company that intends to establish a branch office within or outside the territory of the People’s Republic of China shall need to obtain the approval of the insurance supervision and control authority and to obtain a license to carry on insurance business for such branch office. The branch offices of an insurance company do not possess the status of a legal person; and their civil liability shall be borne by the insurance company.

Article 81 Approval by the insurance supervision and control authority is required for the establishment of any representative office of an insurance company within or without the territory of the People’s Republic of China.

Article 82 Approval by the insurance supervision and control authority is required for any of the following changes to an insurance company: (1) change of the name of the insurance company; (2) change in the amount of the registered capital; (3) change of business premises of the company or its branch offices; (4) adjustment of the scope of business; (5) division or merger of the company; (6) amendment to its articles of association; (7) change of investors or shareholders who hold 10% or more of the company's shares; or (8) other changes as specified by the insurance supervision and control authority. An insurance company shall report any changes of its chairman and its general manager to the insurance supervision and control authority for examination of their qualifications for the positions.

Article 83 The provisions of the Company Law shall apply to the organizational structure of an insurance company.

Article 84 A solely State-owned insurance company shall have a Board of Supervisors comprising representatives of the insurance supervision and control authority, relevant experts, and employees of the insurance company. The board of supervisors shall exercise supervision with respect to the solely State-owned insurance company, over matters such as the drawing of reserve funds, the minimum solvency margin, the maintenance of the value of State owned assets, the value-added State-owned assets, as well as over acts of its senior management personnel in respect of violations of law, administrative rules and regulations or the articles of association and acts considered detrimental to the company's interest.

Article 85 In the event of division or merger of an insurance company, or by virtue of the presence of a cause for its dissolution as stipulated by the company’s articles of association, the insurance company shall be dissolved only upon the approval of the insurance supervision and control authority. The insurance company shall in accordance with law form a liquidation group to carry out the liquidation. Those insurance companies, which include life insurance in their business may not be dissolved, only divided or merged.

Article 86 An insurance company shall be eliminated according to law in the event that its insurance license is revoked by the insurance supervision and control authority due to its violation of law, or administrative rules and regulations. The insurance supervision and control authority shall appoint in time a liquidation committee to carry out the liquidation.

Article 87 In the event that an insurance company is unable to pay its debts when due, it can be declared bankrupt by the People’s Court in accordance with law, with the consent of the insurance supervision and control authority. If an insurance company is declared bankrupt, the People’s Court shall organize a liquidation committee to be composed of the insurance supervision and control authority, other relevant departments and relevant personnel to carry out the liquidation.

Article 88 In the event that an insurance company which includes life insurance in its business is eliminated according to law or declared bankrupt according to law, all life insurance contracts and reserve funds in its possession must be transferred to other insurance companies that include life insurance in their business activities; if no agreement can be reached with respect to such transfer with other insurance companies, the insurance supervision and control authority shall, for the purpose thereof, designate an insurance company that includes life insurance in its business operations to accept the transfer. Where life insurance contracts and reserve funds, as prescribed in the preceding paragraph, are transferred to or accepted by another insurance company designated by the insurance supervision and control authority, the legitimate rights and interests of the insured and the beneficiary shall be preserved.

Article 89 In the event of bankruptcy of an insurance company according to law, the bankrupt State shall, after giving priority to paying off the expenses of bankruptcy proceedings, be used for payment of debts in the following order: (1) wages, salaries and social insurance expenses due to its employees; (2) indemnity or payment of the insurance benefits; (3) unpaid taxes and duties; and (4) cleaning off the company debts. Where the State is insufficient to cover all the claims having the same order of priority, then settlement shall be made on a pro rata basis.

Article 90 When an insurance company ceases its business operations in accordance with law, its license to carry on insurance business shall be canceled.

Article 91 In the absence of provisions in this Law, with regard to such matters as the establishment of, changes to, dissolution and liquidation of an insurance company, the Company Law and other relevant laws and administrative rules and regulations shall apply.

Chapter IV

Rules Governing Insurance Business

Article 92 The scope of business of an insurance company shall be as follows:

(1) property insurance, which includes insurance against loss or damage to property, liability insurance and credit insurance;

(2) insurance of the person which includes life insurance, health insurance and accident and injury insurance.

No insurer may concurrently engage in both the business of property insurance and insurance of the person; however, an insurance company engaged in the business of property insurance may, upon approval by the insurance supervision and control authority, operate the short-term business of health insurance and accidental injury insurance.

The scope of business of an insurance company is subject to the approval of the insurance supervision and control authority. An insurance company shall only operate its insurance business within the scope of business approved.

No insurance company may concurrently engage in the business other than that provided for by this Law or other laws, or administrative rules and regulations.

Article 93 Subject to approval by the insurance supervision and control authority, insurance companies may engage in the following reinsurance business with respect to the insurance business prescribed in the preceding article: (1) outward reinsurance; and/or (2) inward reinsurance.

Article 94 Insurance companies shall, in accordance with the principle of safeguarding the interests of the insured and guaranteeing the capability of reimbursement, set aside all liability reserve funds. Specific measures for setting aside and carrying forward the liability reserve funds to be done by insurance companies shall be formulated by the insurance supervision and control authority.

Article 95 Insurance companies shall set aside a reserve fund for undetermined indemnities pursuant to claims already made or insurance benefits paid, and to claims not yet made nor insurance benefits paid subsequent to the occurrence of the insured event.

Article 96 In addition to the reserve funds described in the preceding two articles, insurance companies shall collect accumulated fund in accordance with relevant laws, administrative rules and regulations and stipulations of the State financial and accounting systems.

Article 97 In order to protect the interests of the insured, and to ensure their own steady and healthy operation, insurance companies shall contribute to an insurance protection fund through making deductions pursuant to the provisions of the insurance supervision and control authority. The insurance protection fund shall be under centralized management and used on the basis of overall planning and arrangement. Specific measures for control and use of the insurance protection fund shall be formulated by the insurance supervision and control authority.

Article 98 An insurance company shall maintain a minimum solvency commensurate with the size of its business. After deduction of the amount of its actual liability from the value of its actual assets, the balance shall not be less than the amount specified by the insurance supervision and control authority. In the event that the balance is less than the amount stipulated, its equity capital shall be replenished to make up the difference.

Article 99 For those insurance companies engaged in property insurance business, the premiums retained for the current year shall not exceed four times the combined total of its paid-up capital and its accumulated fund.

Article 100 The liability borne by an insurance company for each risk unit, that is, the liability of an insurance company that might arise from the maximum loss or damage caused by the occurrence of a single insured event, shall not exceed 10% of the combined total of its paid-up capital and its accumulated fund. Reinsurance shall be arranged for the portion in excess of this sum. Article 101 The method of computation of an insurance company and its plan for managing huge calamities in respect of a risk unit shall be submitted to the insurance supervision and control authority for approval.

Article 102 An insurance company shall arrange reinsurance in accordance with the relevant provisions specified by the insurance supervision and control authority.

Article 103 Where an insurance company needs to put through outward reinsurance business, it shall give priority to insurance companies established within the territory of the People’s Republic of China.

Article 104 The insurance supervision and control authority shall have the authority to restrict or prohibit insurance companies from handling outward reinsurance business with insurance companies situated outside the territory of the People’s Republic of China or from accepting inward reinsurance business from outside the territory of the People’s Republic of China.

Article 105 An insurance company shall employ its funds in a steady manner, follow the safety principle and ensure that its assets be maintained and increased in value. The employment of funds of an insurance company is limited to bank deposits, bringing and selling of government and financial bonds and other forms of fund stipulated by the State Council. No funds of an insurance company may be employed for the establishment of institutions dealing in bonds or securities or for the establishment of enterprises other than insurance companies. The funds employed by an insurance company and the percentage of the total amount, of funds employed in each specific item shall be prescribed by the insurance supervision and control authority.

Article 106 An insurance company and its employees shall not commit any of the following acts in their business activities: (1) deceiving the applicant, the insured or the beneficiary; (2) concealing from the applicant material information relevant to the insurance contract; (3) preventing the applicant from fulfilling his obligation of making a full and accurate disclosure as provided for in this Law or inducing him not to fulfill such obligation; (4) promising the applicant, the insured or the beneficiary to give them premium rebates or other benefits which are not specified in the insurance contract; or (5) settling a false claim by purposely making up an insured event that never happens, to obtain insured amount by fraudulent means.

Chapter V

Supervision and Control of the Insurance Industry

Article 107 The insurance clauses and premium rates for risks insured that have a bearing on the interests of the public, for risks that are compulsorily insured in accordance with law, and for the newly developed life insurance shall be submitted to the insurance supervision and control authority for examination and approval. When conducting examination before giving approval, the insurance supervision and control authority shall abide by the principle of protecting the interests of the public and preventing unfair competition. The scope of and specific measures for examination and approval shall be formulated by the insurance supervision and control authority. The insurance clauses and premium rates for other insured risks shall be submitted to the insurance supervision and control authority for the record.

Article 108 The insurance supervision and control authority shall establish a sound indicator system for supervision and control over the solvency of insurance companies, in order to exercise supervision and control over the minimum solvency of the companies.

Article 109 The insurance supervision and control authority shall have the authority to inspect the business situation, financial situation and employment of funds situation of an insurance company, and shall have the authority to request an insurance company to furnish relevant written reports and information within a prescribed period of time. An insurance company shall accept supervision and inspection in accordance with law. The insurance supervision and control authority shall have the power to inquire of financial institutions about the deposits of insurance companies.

Article 110 Where an insurance company fails to set aside or carry forward various reserve funds, or fails to carry out reinsurance in accordance with this Law, or seriously violates the provisions of this Law governing the employment of funds, the insurance supervision and control authority shall direct the insurance company to take the following measures for rectification within a prescribed period of time: (1) setting aside or carrying forward various reserve funds in accordance with law; (2) carrying out reinsurance in accordance with law; (3) correcting acts of illegally employing the funds; or (4) replacing its person in charge and relevant management personnel involved.

Article 111 Pursuant to the stipulations of the preceding article, in the event that an insurance company fails to correct the situation within the prescribed period, after it has been directed to do so by a decision of rectification of the insurance supervision and control authority, the latter department shall then select insurance professionals and designate relevant personnel from the insurance company to form a rectification task force to carry out the rectification work of the said insurance company. The decision of rectification shall be publicized, giving the name of the insurance company referred to, the reason for rectification, the composition of the rectification task force as well the period of rectification.

Article 112 In the course of the rectification, the rectification task force shall have the authority to supervise the daily business operation of the said insurance company. The person in charge and relevant personnel of the insurance company shall perform their respective functions under the supervision of the rectification task force.

Article 113 In the course of the rectification, the existing business of the insurance company may be continued. The insurance supervision and control authority shall, however, have the authority to stop the insurance company from developing new business, or to suspend part of its business, or to make adjustment in employment of its funds.

Article 114 Where an insurance company under rectification has, subsequent to the rectification, corrected its violations of this Law and has resumed its normal business operations, the rectification shall cease after the report submitted by the rectification task force is approved by the insurance supervision and control authority.

Article 115 Where an insurance company violates the provisions of this Law and impairs the public interest of society, by which it might seriously jeopardize or has already jeopardized its solvency, the insurance supervision and control authority may implement a take-over of the said insurance company. The purpose of such a take-over is to adopt necessary measures to protect the interests of the insured and resume the normal operations of the insurance company. The credit-debt situation of the insurance company taken over shall not change as a result of the take-over.

Article 116 The composition of the take-over task force and the implementing procedure of the take-over shall be determined and publicized by the insurance supervision and control authority.

Article 117 Where the term of the take-over expires, the insurance supervision and control authority may determine to extend it. However, the maximum term of the take-over may not exceed two years.

Article 118 Where the term of the take-over expires and the insurance company has resumed its normal operational capacity, the insurance supervision and control authority may determine to terminate the take-over.

Where the take-over task force deems that the assets of the insurance company taken over are no longer sufficient to meet its liabilities, the take-over task force may, with the approval of the insurance supervision and control authority, apply to the People's Court to have the said insurance company declared bankrupt in accordance with law.

Article 119 An insurance company shall submit its business reports, financial and accounting reports and related Statements for the preceding year to the insurance supervision and control authority within three months after the end of each fiscal year, and publicize such reports and statements in accordance with law.

Article 120 An insurance company shall submit to the insurance supervision and control authority its business statistics Statements for the preceding month by the end of each month.

Article 121 Insurance companies shall appoint and employ actuarial professionals recognized by the insurance supervision and control authority and establish an actuarial report system.

Article 122 Insurance companies shall see to it that matters of insurance business are truthfully recorded in the business reports, financial and accounting reports, actuarial reports and other relevant statements, documents and materials and that there are no false records, misleading statements or major omissions.

Article 123 The insurer and the insured may employ independent loss adjusting organizations established in accordance with law or experts having statutory qualifications, to carry out adjustments and appraisals as regards losses and damages resulting from the occurrence of insured events. The loss adjusting organizations or experts employed according to law to carry out adjustments and appraisals of insured events shall conduct their business impartially in accordance with law. Where losses or damages are caused to the insurer or the insured intentionally or by mistake, the organizations or experts shall bear the liability to pay compensation in accordance with law. The loss adjusting organizations employed according to law to carry out adjustments and appraisals of insured events shall collect charges in accordance with the provisions of laws, administrative rules and regulations.

Article 124 An insurance company shall properly keep its complete account books, original vouchers as well as relevant material with respect to its business operations. The accounting books, original vouchers and other relevant material stipulated in the preceding paragraph should be kept for not less than 10 years beginning from the date of the termination of the contract.

Chapter VI

Insurance Agents and Insurance Brokers

Article 125 An insurance agent is an entity or individual that has been authorized by an insurer to transact insurance business on its behalf within the scope of authorization and gets in return agent’s handling fees to be collected from the insurer.

Article 126 An insurance broker is an entity that, in the interest of the applicant, provides intermediary services between the applicant and the insurer for the conclusion of an insurance contract and receives a commission therefor in accordance with law.

Article 127 Where the insurer authorizes an insurance agent to transact insurance business on its behalf, it shall sign an agreement to such an effect with the insurance agent, in which the rights and obligations of both parties and other agency matters are agreed upon according to law.

Article 128 The insurer shall be liable for the acts of its agents when they transact insurance business on behalf of the insurer in pursuance of the authorization. Where an insurance agent, when transacting insurance business on behalf of the insurer, oversteps the authority delegated and the applicant has good reason to believe that it has the authority of agency, and has concluded an insurance contract with it, it shall bear the insured liability. However, the insurer may, in accordance with law, investigate the responsibility of the insurance agent that oversteps the authority delegated to it.

Article 129 When transacting life insurance business, no individual insurance agents may accept authorization from two or more insurers concurrently.

Article 130 An insurance broker shall be liable for loss or damages caused to the applicant or the insured due to his fault in the course of transacting insurance business.

Article 131 When transacting insurance business, no insurance agents or brokers may commit any of the following acts: (1) deceiving the insurer, applicant, insured or beneficiary; (2) concealing material information with respect to the insurance contract; (3) preventing the applicant from fulfilling his obligation of making a full and accurate disclosure, or inducing the applicant not to fulfill his obligation of making a full and accurate disclosure; (4) promising to give the applicant, the insured or the beneficiary benefits other than the ones provided for in the insurance contract; or (5) by taking advantage of the administrative powers and position, or of the occupational facilities, or by employing other illegitimate means, coercing or inducing the applicant to enter into an insurance contract.

Article 132 An insurance agent or an insurance broker shall meet the qualification requirements prescribed by the insurance supervision and control authority and shall obtain an insurance agent license or an insurance broker license, issued by the insurance supervision and control authority, with which to register with the industry and commerce administration authorities, get a business license therefrom and pay a guarantee deposit or buy insurance to cover professional liability.

Article 133 An insurance agent or an insurance broker shall have his own business site, set up special account book for keeping revenue and expenditure in connection with the business of the insurance agent or the insurance broker, and shall be subject to the supervision of the insurance supervision and control authority.

Article 134 The service fees for insurance agents and commissions for insurance brokers shall only be paid to the legally qualified insurance agents and insurance brokers, not to any other persons.

Article 135 An insurance company shall keep a register of its insurance agents.

Article 136 Insurance companies shall improve training and management of the insurance agents to enhance their professional ethics and competence, and they may not instigate or mislead them to conduct or into conducting activities in violation of the obligation of good faith. Article 137 The provisions of Articles 109 and 119 of this Law shall apply to insurance agents and insurance brokers.

Chapter VII

Legal Liabilities

Article 138 An applicant, an insured or a beneficiary, who commits insurance fraud by means of any of the following acts, which constitutes a crime, shall be investigated for his criminal responsibility in accordance with law: (1) in the case of the applicant, deliberately falsifying the subject matter of the insurance and swindling the insured amount out of the insurer; (2) falsely alleging the occurrence of an insured event which in fact has not occurred, and swindling the insured amount out of the insurer; (3) deliberately causing the occurrence of an event which leads to property damage and obtaining the insured amount by fraudulent means; (4) deliberately causing the occurrence of such insured events in the insurance of the person as death of the insured, injury and disability, or illness and obtaining the insured amount by fraudulent means; whereupon an insurance claim is fraudulently made; or (5) forging or tampering with certifications, data or other evidence related to the occurrence of the insured event, or abetting, instigating or bribing others to adduce false evidence, data, or other proofs, or cooking up the cause of the occurrence of the insured event or overstating the extent of loss, thereby obtaining the insured amount by fraudulent means. Administrative sanctions shall be imposed in accordance with the relevant regulations of the State if the circumstances attending any of the acts listed in the preceding paragraphs are minor and do not constitute a crime.

Article 139 Where an insurance company or one of its staff members, when transacting insurance business, conceals material information with respect to the insurance contract, and deceives the applicant, the insured or the beneficiary, or where the insurance company refuses to fulfill its obligation agreed to in the insurance contract to pay indemnity or insurance benefits, which constitute a crime, the insurance company shall be investigated for criminal responsibility in accordance with law. If the violation is not serious enough to constitute a crime, the insurance supervision and control authority shall impose on the insurance company a fine of not less than 50,000 yuan but not more than 300,000 yuan; the staff member who violates the law shall be fined not less than 20,000 yuan but not more than 100,000 yuan; and if the circumstances are serious, restrictions shall be imposed on the business scope of the insurance company or the company shall be instructed to cease accepting new insurance business. An insurance company or one of its staff members that prevents the applicant from fulfilling his obligation of making a full and accurate disclosure, or induces the applicant not to fulfill his obligation of making a full and accurate disclosure, or promises to give unlawful premium rebates or other benefits to the applicant, the insured or the beneficiary, which constitutes a crime, shall be investigated for criminal responsibility in accordance with law; if the violation is not serious enough to constitute a crime, the insurance company shall be instructed by the insurance supervision and control authority to make rectification and shall be fined not less than 50,000 yuan but not more than 300,000 yuan; the staff member who violates the law shall be fined not less than 20,000 yuan but not more than 100,000 yuan; and if the circumstances are serious, restrictions shall be imposed on the business scope of the insurance company or the company shall be instructed to cease accepting new insurance business.

Article 140 Where an insurance agent or an insurance broker deceives the insurer, the applicant, the insured or the beneficiary in his business operations, which constitutes a crime, the insurance agent or the insurance broker shall be investigated for criminal responsibility in accordance with law; if the violation is not serious constitute a crime, the insurance supervision and control authority shall instruct him to make rectification and impose upon him a fine of not less than 50,000 yuan but not more than 300,000 yuan; and if the circumstances are serious, the business license of the insurance agent or the insurance broker shall be revoked.

Article 141 Where an insurance company or one of its staff members deliberately fabricates the occurrence of an insured event and falsely settles a fictitious claim, thereby swindling the insured amount, which constitutes a crime, the insurance company or the staff member shall be investigated for criminal responsibility in accordance with law.

Article 142 Anyone who, in violation of the provisions of this law, establishes an insurance company or illegally engages in commercial insurance business shall be outlawed by the insurance supervision and control authority; if the violation constitutes a crime, he shall be investigated for criminal responsibility in accordance with law; if the circumstances are not serious enough to constitute a crime, his unlawful gains shall be confiscated by the insurance supervision and control authority, and he shall be fined not less than the amount of, but not more than five times the amount of, the unlawful gains; and if there are no unlawful gains or the amount of the unlawful gains is less than 200,000 yuan, he shall be fined not less than 200,000 yuan but not more than one million yuan.

Article 143 Where an insurance company, in violation of the provisions of this law, engages in insurance business beyond the scope of business approved or concurrently engages in the business other than that provided for by this Law, or other laws, or administrative rules and regulations, which constitutes a crime, it shall be investigate for criminal responsibility in accordance with law; if the circumstances are not serious enough to constitute a crime, the insurance supervision and control authority shall instruct the insurance company to make rectification and to return the premiums collected, shall confiscate its unlawful gains and shall impose on it a fine of not less than one time the amount of, but not more than five times the amount of, its unlawful gains; and if there are no unlawful gains or the amount of the unlawful gains is less than 100,000 yuan, it shall be fined not less than 100,000 yuan but not more than 500,000 yuan; and if the insurance company fails to make rectification within the specified time limit or if the consequences are serious, the said authority shall instruct it to suspend business operation for rectification or revoke its insurance business license.

Article 144 Whoever, in violation of the provisions of this Law and without being approved, arbitrarily makes changes in the name, articles of association, registered capital of the insurance company, its business site or that of its branches, shall be subject to the direction of the insurance supervision and control authority for correction and the imposition of a fine of not less than 10,000 yuan but not more than 100,000 yuan.

Article 145 Whoever, in violation of the provisions of this Law, commits any of the following acts, shall be subject to the direction of the insurance supervision and control authority for correction and the imposition of a fine of not less than 50,000 yuan but not more than 300,000 yuan; where the circumstances are severe, the insurance supervision and control authority may restrict the scope of business, direct the company to cease accepting new business or revoke the insurance business license: (1) failing to set up a guarantee fund as required or using the guarantee fund in violation of the provisions; (2) failing to set aside or carry forward all the liability reserve funds, or set aside an outstanding loss reserve, as required; (3) failing to contribute to the insurance guarantee fund or the accumulated reserve fund as required; (4) failing to effect outward reinsurance as required; (5) employing the funds of the insurance company in violation of the provisions; (6) establishing branches or representative offices without approval; (7) carrying out a division or a merger of the company without approval; or (8) failing to submit for examination and approval the insurance clauses and premium rates for risks, as required.

Article 146 Whoever, in violation of the provisions of this Law, commits either of the following acts, shall be subject to the direction of the insurance supervision and control authority to correct the wrong, and the imposition of a fine of not less than 10,000 but nor more than 100,000 yuan, if he/she fails to correct the wrong within a prescribed period of time: (1) failing to submit relevant reports, statements, documents and information as required; or (2) failing to submit for the record the insurance clauses and premium rates for risks, as required.

Article 147 Where an insurance company, in violation of the provisions of this Law, commits one of the following acts, which constitutes a crime, it shall be investigated for criminal responsibility in accordance with law; if the circumstances are not serious enough to constitute a crime, the insurance supervision and control authority shall instruct the insurance company to make rectification and shall impose on it a fine of not less than 100,000 yuan but not more than 500,000 yuan; and if the circumstances are serious, the authority may impose restrictions on its scope of business, instruct it to cease accepting new insurance business or revoke its insurance business license: (1) submitting false reports, statements, documents and information; or (2) refusing to accept or hindering inspection and supervision conducted in accordance with law.

Article 148 Whoever, in violation of the provisions of this Law, commits any of the following acts, shall be subject to the direction of the insurance supervision and control authority to correct the wrong, and the imposition of a fine of not less than 50,000 yuan but not more than 300,000 yuan: (1) underwriting insurance for the subject matter thereof in excess of its insurable value, where the circumstances are serious; or (2) underwriting life insurance where death is the prerequisite for the payment of the insurance benefits, for those who have no capacity for civil acts.

Article 149 Any unit that, in violation of the provisions of this Law and without the license for insurance agent business or insurance brokerage business, illegally engages in insurance agent business or insurance brokerage business shall be outlawed by the insurance supervision and control authority; if the violation constitutes a crime, it shall be investigated for criminal responsibility in accordance with law; if the circumstances are not serious enough to constitute a crime, the said authority shall confiscate its unlawful gains and impose on it a fine of not less than the amount of, but not more than five times the amount of, the unlawful gains; and if there are no unlawful gains or the amount of the unlawful gains is less than 100,000 yuan, it shall be fined not less than 100,000 yuan but not more than 500,000 yuan.

Article 150 With regard to the senior managers and other persons of an insurance company who are directly responsible for a violation of the provisions of this Law, which is not serious enough to constitute a crime, the insurance supervision and control authority may, on the merits of each case, give a disciplinary warning, instruct to have them replaced, or impose a fine of not less than 20,000 yuan but not more than 100,000 yuan.

Article 151 Whoever, in violation of the provisions this Law, causes damage or loss to others, shall bear civil liability therefor in accordance with law.

Article 152 An official who approves the application for establishment of an insurance company which does not meet the requirements stipulated by this Law, or approves the application for insurance agent or insurance broker which does not meet the requirements stipulated by this Law, or commits other acts by abusing their powers or neglecting their duties, which constitutes a crime, shall be investigated for criminal responsibility in accordance with law; and if the violation is not serious enough to constitute a crime, he shall be given administrative sanctions in accordance with law.

Chapter VIII

Supplementary Provisions

Article 153 The Maritime Code of the People’s Republic of China shall be applicable to marine insurance. For matters where the Maritime Code does not specify, this Law shall apply.

Article 154 This Law shall be applicable to Chinese-foreign equity insurance companies, wholly foreign-funded insurance companies and branches of foreign insurance companies; where other laws and administrative rules and regulations provide otherwise, the provisions there shall prevail.

Article 155 The State supports the development of insurance businesses, which facilitate agricultural production. Agricultural insurance shall be governed by other laws and administrative rules and regulations.

Article 156 Insurance institutions not in the nature of insurance companies as provided by this Law shall be governed by other laws and administrative rules and regulations.

Article 157 Insurance companies established prior to the implementation of this Law upon approval in accordance with the regulations of the State Council shall continue to exist. Those which do not fully meet the requirements stipulated in this Law shall satisfy the requirements within a prescribed period of time. Specific measures shall be formulated by the State Council.

Article 158 This Law shall go into effect as of October 1, 1995.