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China: draft rules to allow life insurers to sell policies online to purchasers nationwide

Anna Elshafei

28 April 2014
On 15 April 2014, China's insurance regulator, the China Insurance Regulatory Commission (the "CIRC"), issued Circular Regarding the Regulation of Online Insurance Business Operation of Life Insurance Companies (Draft for comments) (in Chinese: 关于规范人身保险公司经营互联网保险有关问题的通知(征求意见稿)).

If implemented, this circular will allow life insurance companies to sell accident, fixed-term life and whole life policies, through online channels, to customers nationwide – subject to certain provisos, including that they meet solvency requirements of 150%, have appropriate internal controls in place and can satisfy customer requirements. Sales websites must note the location of the insurer's physical entity and that it may not be able to provide certain services in other areas.

Currently, insurers in China may sell policies only within the area or areas of China where they are licensed to do so. It is possible to obtain a licence to sell reinsurance nationally, but this is generally not the case for direct insurance.

This change would likely be particularly welcomed by foreign life insurers operating in China. Most foreign-invested insurers do not have a wide, cross-China network of branches and are commonly unable to obtain approval to open multiple branches concurrently (despite there being no regulation to this effect). This puts them at a disadvantage against their domestic competitors, who do not face this restriction. This circular would, if implemented, give foreign-invested life insurers access to a national online market without the need to establish multiple branches across the country.

Anna Elshafei

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