By Ms Lynn Yang, a partner and Ms Ai Tong, an associate in the Shanghai office of Norton Rose Fulbright
On 22 July 2015, the China Insurance Regulatory Commission (CIRC) issued the Interim Measures on Supervision of Internet Insurance Business (the Internet Business Measures) which will take effect on 1 October 2015. The Internet Business Measures will supersede the previous regulations issued by CIRC in 2011 solely to cover supervision of the internet insurance business of professional insurance agency companies (PIAs) and insurance brokerage companies (IBs).
The issuance of the Internet Business Measures is considered to be a response to the latest nationwide strategy on the development of internet plus (internet +) business, which was initiated by CIRC and nine other ministries and departments in mid-July this year. According to such strategy, traditional insurance entities are encouraged to develop on-line insurance business and to provide related insurance services.
What is “internet insurance business”?
Generally speaking, entering into insurance contracts and providing insurance services through self-operated or third-party operated network platforms and the use of internet and mobile communication technologies would be deemed as “internet insurance business” under the Internet Business Measures.
The ambit of internet and mobile communication technologies which are to be covered by the Internet Business Measures is further expanded in the Internet Business Measures to include such elements as instant messaging tools, application software and social platforms.
Who can engage in “internet insurance business”?
For a long time, CIRC only expressly permitted qualified PIAs and IBs to engage in internet insurance business. Now, the Internet Business Measures clearly state that only insurance companies and specialised insurance intermediaries can engage in internet insurance business.
Specialised insurance intermediaries will only include PIAs, IBs and insurance loss adjusters which hold national licenses issued by CIRC for conducting relevant insurance intermediary businesses. All other entities, such as non-insurance subsidiaries of insurers or insurance group companies, insurance asset management companies, specialised insurance intermediaries which only hold regional licences and sideline insurance agency companies (SIAs) are excluded and will not be qualified to engage in internet insurance business.
In general, a third-party platform may only provide technical support to qualified insurance entities which carry on internet insurance business and such platform will itself need to meet certain qualification requirements. Liberalisation on geographic restrictions
Prior to the Internet Business Measures coming into force, insurance businesses are generally prohibited from operating outside the province where the applicable insurer is registered and has a physical presence. However, the relevant legislation is silent on whether insurers can engage in on-line insurance business across provincial boundaries.
It is however encouraging that, in the Internet Business Measures, insurers are now expressly permitted to engage in the following types of insurance business on-line across provincial boundaries:
• personal accident insurance, term life insurance and ordinary whole life insurance;
• family property insurance, liability insurance, credit insurance and warranty insurance provided to individual policy holders or insureds; and
• other property insurance which can be distributed, underwritten and claimed independently and completed through the internet.
CIRC also provides flexibility on adjusting the above scope of permitted on-line insurance business across provincial boundaries. It is, however, worth noting that the scope of business and jurisdictions of on-line insurance business carried out by qualified insurance intermediaries shall not exceed that of the relevant insurance underwriters.