China (People's Republic of China) Insurance Information

CIA link to demographic/economic data on China

General China Insurance Information

• Compulsory Insurance (not widely enforced):
  
  1. Third Party Automobile for Foreigners;
  2. Third Party Automobile in certain Provinces and being introduced throughout the country beginning in the larger cities;
  3. Workers’ Compensation - Shenzhen Special Economic Zone
  4. Old Age Pension and Unemployment Insurance
  5. Property (fire) in Shenzhen for commercial risks
  6. Nuclear liability for operators.
• Non-Admitted Insurance:
  Prohibited. Insurance can only be placed with a company licensed to conduct business in China.
• Policy Wordings & Rates / Tariffs Controlled:
  Standard forms and rates for all types of insurance set by the Government. All coverages are subject to tariff rating – 20% to 30% deviations are possible.
• Policy Language:
  English and Chinese.
• Types of Insurance Restricted to Government Institutions:
  All compulsory coverages as above.
• Policy Currency:
  Renminbi (RMB); note - also referred to by the unit Yuan (CNY); except U.S.$ and other major currencies can be used for Chinese – Foreign joint ventures.
• Currency Restrictions / Exchange Controls:
  The Renminbi is not convertible or freely exchanged. Currency transfers are strictly controlled by the Bank of China.
• Policy Period:
  Annual but project-type insurance can be written for longer periods.
• Cancellation Provisions:
  Check policy’s cancellation provisions.
• Premium Tax etc. paid by Insured:
  None known; but Insurers pay a 5% business tax to the government based on net income. There are also local taxes that vary by region/city ranging from 0% to 0.5%. There are no fire service levies or other charges on insurers or insureds.
• Insurance Companies:
  Ping An Insurance Co. - based in Shenzhen
  China Pacific Insurance Co. - based in Shanghai
  Min An Insurance Co.- based in Hong Kong but licensed to do business in Shenzhen and Hankow
  Agriculture Insurance Company - based in Xinjiang territory
  New China Life Insurance Co. - based in Beijing
  Yongan Life Insurance Company - based in Xian
  Taikang Life Insurance Co - based in Bejing
  Hua Tai Insurance Co - based in Bejing
  Sinosafe Insurance Co. - based in Shenzhen
• Brokers:
  The China Insurance Regulatory Commission (CIRC) has issued a new regulation allowing insurance brokers to provide services throughout China without the need to establish local offices.
• Brokerage Commissions:
  Negotiable - Brokers should look for reinsurance commissions.
• Broker of Record Letters:
  Becoming understood and recognized.
• Reinsurance:
  The compulsory reinsurance cession of all Non-Life business to China Re was abolished at the end of 2005. However, under the terms of the Administration of Reinsurance Business regulations, direct insurers must reinsure with domestic insurers or reinsurers on a priority basis. A minimum of 50% treaty and facultative cessions should be placed with domestic insurers. Reinsurance programs are negotiable but in no way should be taken for granted. A properly prepared and structured reinsurance program involving Chinese Insurers stands a better chance.
• Local Natural Hazards:
  Earthquake, Flood and Windstorm.
• Other Information:
  

Property Insurance

• Fire:
  Standard fire perils include - earthquake, volcanic eruption, subsidence, windstorm and flood. Some usual perils are excluded from normal cover such as riot / civil commotion but can be provided for using foreign market wordings. British forms are usually followed.
• All Risk:
  Available.
• Coinsurance:
  100%.
• Blanket Insurance:
  Not available.
• Business Interruption:
  Available using UK Loss of Profits form.
• Replacement Cost:
  Available.
• Discount for fire protection equipment / systems:
  Unusual but always negotiate.

Boiler & Machinery / Machinery Breakdown / Engineering

• Wordings:
  UK and U.S. and Business Interruption available.

General / Public Liability

• Available Wordings:
  UK Public Liability contract.
• Comments:
  Coverage is written on an occurrence basis. Coverage is unlimited and available generally only for joint ventures. There are no provisions for defense cost according to one source.

Automobile / Motor

• Compulsory Limits:
  Many Provinces have requirements and the usual coverage is Unlimited.

Workers’ Compensation

• Comments:
  All employees are covered under the Government Social Security Program. Medical Expenses and Occupational Disease benefits are included under the Program. Employees have no right to sue.

Marine

• Available Wordings:
  The Insurance Association of China (IAC) will allow issuance of most recognized wordings for Export Marine Cargo.

Crime

• Available Coverage:
  Fidelity, Money & Securities, Burglary, etc. and various Surety (most all following UK policy coverage forms).