The China Insurance Regulatory Commission ("CIRC") has issued the Guidelines for the Internal Control of the Operation of Insurance Funds (Draft for Comment) (GICIF) and the Practice Notes on the Internal Control of the Operation of Insurance Funds (Draft for Comment) (No.1-3) to seek comments by October 13, 2015.
Among these documents, the Guidelines for the Internal Control of the Operation of Insurance Funds (Draft for Comment) specify that all investment assets resulting from the operation of insurance funds of insurance institutions shall be subject to third-party custody and supervision. Insurance institutions shall, based on the characteristics of their operation of funds, establish three monitoring defense lines: the first defense line is based on the system under which a front-line post shall be held by two employees who are jointly held responsible for the post; the second defense line is the mutual supervision and checks and balances among the relevant departments and the relevant posts; and the third defense line is the supervision and feedback system which is implemented by an internal control department and is applicable to all posts, departments, institutions, and business.