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China – Notice On Issues In Relation To Regulating Internet Insurance Business Of Life Insurance Companies.

22 May, 2014


Legal News & Analysis – Asia Pacific – China – Insurance & Reinsurance


On 15 April 2014, the CIRC enacted a second draft of Notice on Issues in relation to Regulating Internet Insurance Business of Life Insurance Companies (opinion solicitation version) (“Draft Notice“) to solicit opinions, following the first draft issued in January. This Draft Notice has comprehensive provisions regulating internet insurance business. Although the Draft Notice is tailored for life insurance companies only, it may shed some light on the regulatory trend for internet insurance business generally.


The Draft Notice defines the internet insurance business as a business that the conclusion of insurance contracts and provision of insurance services are done through internet and mobile telecommunication technology. 


A life insurance company is required to meet various qualifications such as solvency margin not lower than level II to be able to engage in internet insurance business. Other requirements of life insurers mentioned in the Draft Notice include an operation system that supports online application, underwriting, claims handling, information preservation etc.


According to the Draft Notice, the internet insurance business may be conducted through an insurer’s own website, or a website of an insurance intermediary or other company. The life insurer shall be liable for the irregularities of its co-operator.


The Draft Notice also specifies the geographical operation scope of the internet business. If a product falls within certain business categories (e.g. short term casualty insurance), the geographical operation scope may be extended to the places where the company does not have a branch licence. This could be a breakthrough for small and medium-sized life insurance companies as they would then be able to reach out to other regions to conduct business.


The Draft Notice emphasises customer data security and imposes certain responsibilities on life insurers in this regard.


If formally issued, the Draft Notice will become the first in-depth regulation in the area of internet insurance business, which is a booming distribution channel in the recent years and may evolve quickly in the future and therefore requests regulatory guidance.


Clyde & Co


For further information, please contact:


Carrie Yang, Partner, Clyde & Co

[email protected]


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