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Amended insurance law gets approval
Source: Xinhua |
March 2, 2009, Monday
|
Print Edition
Print Edition
THE Chinese legislature approved on Saturday the amended Insurance Law, which mandates the state regulatory body to prevent risky business operations of insurance companies.
The amended law says that the State Council's insurance regulatory body has the right to order shareholders of insurers to stop affiliate company transactions that seriously harm the firm's interests and undermine its solvency.
The regulatory body could restrict rights of insurance company shareholders if they carry out risky capital operations, the law says.
The revised law will take effect on October 1, according to a statement issued by the National People's Congress Standing Committee's bimonthly session, which ended on Saturday.
If companies refuse to stop risky transactions, the regulatory body will have the right to order them to transfer their shares, but the new law gives no details as to how or to whom the shares would be transferred to. For insurance companies with inadequate solvency, the new law authorizes the regulatory body to restrict salaries of the company's board members and senior administrators.
Supervision
Insurance firms will also be restricted from TV commercials or other kinds of advertisement and banned from starting new operations, according to the law.
"The new article was added based on proposals from law makers in previous discussions. It is a supervision measure to prevent and correct the misuse of shareholders' power," said Sun Anmin, deputy director of the NPC law committee, during the session of the 11th NPC Standing Committee.
Since the draft amendment was first submitted for discussion last August, it has been the third time that the top legislature has reviewed the revision.
The new insurance law also expands the investment channel for insurers from government bonds and financial bills to stocks, securities-investment funds and properties. It also tightens rules for setting up an insurance firm.
The amended law says that the State Council's insurance regulatory body has the right to order shareholders of insurers to stop affiliate company transactions that seriously harm the firm's interests and undermine its solvency.
The regulatory body could restrict rights of insurance company shareholders if they carry out risky capital operations, the law says.
The revised law will take effect on October 1, according to a statement issued by the National People's Congress Standing Committee's bimonthly session, which ended on Saturday.
If companies refuse to stop risky transactions, the regulatory body will have the right to order them to transfer their shares, but the new law gives no details as to how or to whom the shares would be transferred to. For insurance companies with inadequate solvency, the new law authorizes the regulatory body to restrict salaries of the company's board members and senior administrators.
Supervision
Insurance firms will also be restricted from TV commercials or other kinds of advertisement and banned from starting new operations, according to the law.
"The new article was added based on proposals from law makers in previous discussions. It is a supervision measure to prevent and correct the misuse of shareholders' power," said Sun Anmin, deputy director of the NPC law committee, during the session of the 11th NPC Standing Committee.
Since the draft amendment was first submitted for discussion last August, it has been the third time that the top legislature has reviewed the revision.
The new insurance law also expands the investment channel for insurers from government bonds and financial bills to stocks, securities-investment funds and properties. It also tightens rules for setting up an insurance firm.
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