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Limiting investment destinations reduces opportunities PDF

Limiting investment destinations reduces opportunities for investment returns and therefore directs insurance companies to rely more on income from the sale of insurance policies. According to experts, in the coming years, the Chinese insurance market is expected to reduce profits, which will complicate the activities of national insurers. Since 1996, the national Bank of China has reduced refinancing rates five times.

The insufficient level of additional profit limits the growth rate of insurance and creates prerequisites for opening the Chinese market to foreign insurers, as Chinese insurance companies are in need of additional capital. In this situation, foreign insurers can become a real source of replenishment of the capital of Chinese insurers.

Foreigners have already expressed interest in the Chinese insurance market. Taking into account the possible influence of foreign insurers on the insurance market of China, the government pays special attention to the regulation of access to the activities of foreign insurance companies in the country. Thus, CIRC intends to allow insurers to establish their own subsidiaries or joint ventures, the function of which will be the management of insurance reserves and funds. In doing so, CIRC hopes to get insurers more involved in managing their investments.

Currently, many insurance companies operate and have representative offices in China. With the increasing competition the control over the observance of laws and regulations governing insurance business, it is increasingly important.

To comply with the principles of fair competition, the law of the PRC" on insurance " provides for sanctions for violations of the law in the form of a fine, suspension or cancellation of the license, liquidation of the insurer, as well as measures of criminal and administrative responsibility against their officials.

Persons who have illegally created insurance organizations or illegally carry out insurance activities are subject to criminal liability, and insurance organizations-to liquidation.

If less serious violations of the Law are found to be non-criminal, the people's Bank of China and its branches will recover the illegal proceeds from the guilty organizations or persons and impose fines.

Organizations that make changes to the company's documentation or its activities without the permission of the People's Bank of China must eliminate the violations and pay a fine within 30 days. If at the end of this period the violation has not been corrected, the managers and perpetrators will be additionally fined.

If false reports, reports, documents and materials are found during the inspection, as well as refusal or obstruction of inspection and supervision or the presence of violations not eliminated within 30 days, the managers and the perpetrators will be fined.

Insurers who have taken on insurance risks exceeding their financial capabilities must transfer to reinsurance or co-insurance the corresponding part of the risks or increase the authorized capital. In case of violation of this requirement, the company is obliged to pay a fine.

Organizations that use insurance rules and tariff rates not approved by the People's Bank of China in their activities must eliminate violations and pay a fine within 30 days. In the event of failure to make changes before the deadline shall be suspended conclusion of new contracts, sacked the Manager, may be revoked the license to conduct insurance activities.

Insurance companies that accept insurance contracts through intermediaries not approved by the People's Bank of China and pay them a fee shall be fined in the amount of 1-5 times the amount of remuneration paid by them.

Insurance companies operating in the territory not approved by the People's Bank of China, and received income from premiums in the amount of up to 10 million yuan, within 30 days are obliged to transfer the concluded contracts and collected premiums to other insurance companies. Income derived from such activities is withdrawn by the People's Bank of China. A fine is imposed on the guilty company. If at the end of the period the violations have not been liquidated, the insurance company loses its license.

If an insured event occurs within the period established for the elimination of violations under the contracts accepted for liability, this insurance company is obliged to fulfill its obligations.


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