The China Insurance Regulatory Commission ("CIRC") has recently distributed the Circular on Regulating the Design and Development of Products by Personal Health Insurances (the "Circular"), with immediate effect.
The Circular notes that insurance companies are supported and encouraged to develop four types of personal health insurances, including the long-term annuity insurance products developed by insurance companies, the purpose of which is to primarily help consumers accumulate long-term survival benefits and long-term pensions and provide consumers with long-term and continuous services for getting the survival benefits and pensions. The Circular clearly states that insurance products developed and designed by insurance companies shall meet seven requirements, one of which reads that "for an endowment life insurance or an annuity insurance, the initial survival benefits shall be offered after the insurance policy thereof is valid for five years, and the proportion of benefits annually offered or the proportion of partial benefits acquired shall not be higher than 20 percent of the insurance premium paid". Moreover, the Circular stresses that where an insurance company designs and develops personal health insurance products in violation of regulatory provisions, or evades regulatory provisions on purpose by designing its products in a special way, the CIRC will take certain regulatory measures, such as prohibiting it from applying for new products within a certain time limit, against such insurance companies.