China - Provisional Measures for the Supervision of Internet Insurance Business
New internet insurance business measures came into effect in China on 1 October 2015.
The measures, which will remain effective for a period of at least three years, apply to locally-licensed insurance companies and intermediaries that conclude insurance contracts, and/or provide insurance services through self-operated or third-party operated online platforms. Insurance intermediaries include corporate agencies, brokers and surveyors with a nationwide licensed business area.
Importantly, the measures allow locally-licensed insurers to conduct nationwide business in certain classes via the internet, without setting up branches in the relevant province. This may bring some new business opportunities to those insurance companies with few branches (like Lloyd’s China), as insurance companies are otherwise only able to operate within their licensed provinces.
When engaging in internet insurance business for the following lines of business, insurance companies may extend their business to provinces where they do not have a branch:
- personal accidental injury insurance, fixed term life insurance and ordinary whole life insurance;
- personal line business, including household insurance, personal liability insurance, personal credit and surety insurance (but not auto business); and
- property and casualty insurance (if the entire process of distribution, underwriting and claims handling can be completed independently via the internet).
For all other lines of business, insurance companies can only operate within their licensed provinces.
The regulations require various disclosure requirements. Insurers, for example, must disclose a list of any associated branch companies, and provide access to customer service details and information on complaints procedures. Intermediaries must disclose information regarding their insurance business licence, as well as the scope of their authorisation. Third-party online platforms must disclose information regarding any insurance institution it cooperates with, in a prominent place, and make clear that the insurance services are provided by insurance institutions.
Managing agents participating in Lloyd's China should share any proposed internet projects (or those already underway) with Maggie Zhu (Maggie.Zhu@Lloyds.com), Chief Compliance Officer, for endorsement before making the information live.