Insurance activities under Chinese law


With the growth of the insurance industry, entities such as insurance agents, brokers, and claims adjusters are becoming increasingly important. These entities play different roles to enable the industry to prosper, for example, to provide more value-added services to their clients and to facilitate insurance processes.

Among these entities, third-party administrators (ATPs) are emerging at the forefront, especially in the field of health insurance. Currently, there is no unified definition of “TPA” as they perform various functions and are subject to different regulatory requirements in different jurisdictions. However, in most cases, TPAs ​​are known to help insurers collect and process information during the insurance, underwriting and claims process, and improve their risk management and control capabilities. It is commonly recognized that insurers outsource some of their activities to TPAs, due to the TPAs’ expertise in certain fields.

In China, along with the expansion of the insurance market in recent years, more insurance entities, including insurers and reinsurers, would like to develop their cooperation with TPAs. It is anticipated that more TPAs ​​will be founded in the future, and its products and services are expected to become more diversified and abundant. As TPAs ​​cover an increasing number of issues, with their multiple business models, concerns arise as to whether this activity may be restricted by insurance regulations. This article, the first of two parts, looks at the strict regulations for the insurance industry under Chinese law, enforced mainly by the China Banking and Insurance Regulatory Commission (CBIRC), and provides an example of what can happen when these regulations are not followed correctly. . More generally, this series aims to explore the possible connection between the business scope and the insurance activities of TPAs ​​in China’s legal and regulatory framework (Hong Kong, Macao, and Taiwan are outside the scope of this series).

Insurance activities under Chinese law

In China, the insurance industry, as a major financial sector, is heavily regulated and supervised by various laws and regulations. These are mainly promulgated by the CBIRC, formerly known as the China Insurance Regulatory Commission (CIRC), as the main regulator. These laws and regulations are intended to comprehensively cover legal and compliance issues in the insurance industry. Regarding insurance activities, Article 6 of the Insurance Law establishes:

The insurance business must be carried out by insurance companies established in accordance with this Law and other insurance entities as established by laws or administrative regulations. No other entity or individual may operate insurance business.

As the fundamental source of law in this regard, the Insurance Law establishes the principle that only insurance entities established and approved in accordance with relevant laws and regulations are eligible to conduct insurance business in China. However, the law does not further develop a definitive concept of “insurance business”. In practice, activities such as underwriting, issuing policies, collecting premiums, assessing claims, and paying claims are generally considered typical insurance business.

From a regulatory perspective, in the context of insurance intermediation activities by insurance brokers, by way of example, article 36 of the Provisions for the Regulation of Insurance Brokers establishes:

An insurance broker may engage in all or part of the following activities: (1) designing insurance plans for policyholders, selecting insurance companies, and managing the insurance purchasing process; (2) assist insureds or beneficiaries in claims; (3) reinsurance brokerage business; (4) provide clients with disaster or loss prevention or risk assessment, risk management consulting services; and (5) other business related to insurance brokers prescribed by the China Insurance Regulatory Commission.

Regarding insurance agents, the regulations distinguish between professional and auxiliary agents. Article 41 of the Provisions for the Regulation of Insurance Agents establishes:

A professional insurance agency may engage in all or part of the following businesses: (1) sales of insurance products as an agency; (2) collection of insurance premiums as an agency; (3) investigation of losses and settlement of claims for services related to insurance as an agency; and (4) other relevant business as prescribed by the insurance regulator under the Council of State.

Its article 42 continues: “a marginal insurance agency may engage in the business prescribed in (1) and (2) of article 41 of this document, as well as other businesses approved by the insurance regulator under the Council of State.”

Regarding claims adjusters, article 43 of the Insurance Claims Adjusters Regulation provides:

A claims adjuster may operate all or part of the following businesses: (1) pre- and post-underwriting inspection, appraisal, and evaluation of risk in connection with insurance or policyholders; (2) appraisal, inspection, evaluation of losses and settlement of claims of the subject of the insurance and disposal of its residual value after the claim; (3) risk management consultancy; and (4) other matters as provided by the CIRC.

In addition, in the Circular Regarding the Prohibition of Illegal Insurance Institutions and Illegal Insurance Activities issued by the CIRC on July 30, 2008, illegal insurance activities include an unapproved entity that conducts:

activities in which fees are collected from the public on behalf of separate insurance premiums, but the obligations promised to be performed include obligations to pay insurance benefits or other similar obligations.

In addition, illegal insurance brokerage activities include an unapproved entity that provides “brokerage services for the purpose of facilitating the conclusion of an insurance contract between policyholders and insurers with the charging of a service fee.”

Regarding regulatory practice, the CBIRC Beijing Office issued a sanction on December 29, 2021 to a technology company after discovering that it had been conducting illegal insurance intermediation activities. The company’s profits were confiscated, it was fined 2,127,000 yuan (approximately £260,000), and illegal activities were prohibited. The sanction was issued in accordance with article 159 of the Insurance Law.


Insurance is strictly regulated in China by laws and regulations, and the CBIRC acts as a regulator that oversees the insurance industry. Only certain licensed entities may operate insurance businesses and doing so without the required license or approval could result in penalties under applicable laws and regulations.

For more information on this topic, please contact zack fu or Agnes Wang at AnJie Law Firm by phone (+86 10 8567 5988) or email ([email protected] either [email protected]). The AnJie Law Firm website can be accessed at