Circular of the China Insurance Regulatory Commission on Issuing the Interim Measures for the Regulation of Credit and Guaranty Insurance Business

Circular of the China Insurance Regulatory Commission on Issuing the Interim Measures for the Regulation of Credit and Guaranty Insurance Business

Bao Jian Cai Xian [2017] No.180

July 11, 2017

All insurance regulatory bureaus and all property insurance companies,

To further regularize activities relating to the credit and guaranty insurance business (hereinafter referred to as "CGI business"), strengthen the regulation of CGI business, guard against systemic financial risks, and promote the sustainable and healthy development of CGI business, the China Insurance Regulatory Commission has formulated the Interim Measures for the Regulation of Credit and Guaranty Insurance Business which are hereby promulgated to you for your compliance and implementation.

Interim Measures for the Regulation of Credit and Guaranty Insurance Business

Chapter I General Provisions

Article 1 To strengthen supervision and administration of credit and guaranty insurance business (hereinafter referred to as "CGI business"), regularize CGI business activities, guard against cross-financial risks, promote the sustainable and healthy development of CGI business, and safeguard the lawful rights and interests of the parties concerned in insurance activities, these Measures are formulated in accordance with the Insurance Law of the People's Republic of China and other applicable laws and regulations.

Article 2 For the purpose of these Measures, the term "credit and guaranty insurance ("CGI insurance")" means insurance whereby credit risks are the subject matter insured, including credit insurance (excluding export credit insurance) and guaranty insurance. The policyholder and the insured party under credit insurance are right owners, while the policyholder is the obligor and the insured party is the right owner under guaranty insurance.
For the purpose of these Measures, the performance obligors mean subjects involved in credit risks under credit insurance and the policyholders under guaranty insurance.
For the purpose of these Measures, the term "CGI business on online lending platforms" means the CGI business provided on online lending platforms for borrowers and lenders, under the collaboration between insurance companies and financial information agencies that are legally established and registered on the record with the provincial local financial regulators and exclusively engage in intermediary business activities for online lending information (hereinafter referred to as "online lending platforms").
For the purpose of these Measures, the term "insurance companies" means property insurance companies.

Article 3 When engaging in CGI business, insurance companies shall comply with laws and regulations and carry out business under the principles of small amount and scattered business, prudence and controllable risks.

Article 4 When engaging in CGI business, insurance companies shall conform to regulatory requirements on solvency, and ensure that the overall scale of CGI business matches their own capital strength. When engaging in CGI business, insurance companies shall pay attention to the underlying risks, fully evaluate the impact of CGI business on companies' liquidity, and remain effective in the management of liquidity risks.

Chapter II Business Rules

Article 5 The core solvency adequacy ratio of an insurance company carrying out CGI business shall be at least 75% in the last quarter, and its aggregated solvency adequacy ratio shall not be less than 150%.
Where the solvency of an insurance company is lower than the above-said criterion, it shall stop carrying out new CGI business, and shall not continue its CGI business until its solvency satisfies the above criterion.

Article 6 Retentions for the CGI business underwritten by an insurance company shall not exceed 10 times its net asset value at the end of the last quarter.
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