(Ratified at the 14th Session of the Standing Committee of the Eighth National People's Congress on June 30, 1995, and promulgated by Presidential Decree No. 51 for implementation commencing on October 1, 1995)

Chapter I General Provisions

Article 1. This Law is formulated to standardize insurance activities, to protect the legal rights of the parties related to insurance activities, to strengthen supervision and management over the insurance industry and to promote the healthy development of the insurance industry.

Article 2. Insurance as referred to in this Law shall mean the commercial insurance act of the Applicant to pay insurance premiums, as agreed in the contract, to the Insurer and the latter to be liable for indemnifying losses to properties caused by the occurrence of events covered in the contract or for making payment of insurance money upon the death, injury, deformity or illness of the Insured or when the Insured reaches a certain age or fulfills a time period as agreed in the contract.

Article 3. Those who engage in insurance activities within the People's Republic of China shall abide by this Law.

Article 4. Those who engage in insurance activities must observe the laws and administrative regulations and abide by the principles of voluntariness, honesty and credibility.

Article 5. Those who engage in commercial insurance business must be insurance companies established in accordance with this Law. Any other unit or individual shall not engage in insurance business.

Article 6. Any legal person or any other organizations within the People's Republic of China who need to purchase domestic insurance shall insure with the insurance companies within the People's Republic of China.

Article 7. Insurance companies shall abide by the principle of fair competition while conducting business and shall not engage in unfair competition.

Article 8. The departments of the State Council in charge of financial supervision and management shall be responsible for carrying out supervision and management over the insurance industry in accordance with this Law.

Chapter II Insurance Contracts

Section 1 Basic Principles

Article 9. The insurance contract is an agreement whereby the Applicant and the Insurer agree on their relation with regard to insurance rights and obligations.

"Applicant" shall mean a person who enters into an insurance contract with the Insurer and bears the obligation to pay insurance premiums in accordance with the insurance contract.

"Insurer" shall mean an insurance company that enters into an insurance contract with the Applicant and is liable for compensation or payment of insurance money.

Article 10. The signing of an insurance contract between the Applicant and the Insurer shall be based upon the principles of equality, mutual benefit, voluntariness and friendly consultation, and shall not harm public interest.

Any insurance company or any other organizations shall not force others to sign any insurance contract, unless such insurance is compulsory as stipulated by law and administrative regulation.

Article 11. The Applicant shall have an insurable interest in the subject matter insured.

The insurance contract shall be null and void if the Applicant has no insurable interest in the subject matter insured.

Insurable interest shall mean the legally acknowledged interest that the Applicant has toward the subject matter insured.

Subject matter insured shall mean material properties and relevant interests, or human life or human body that have been made the subject of insurance.

Article 12. An insurance contract is established once an Applicant puts forth a proposal for insurance and the Insurer agrees to accept the proposal and the Applicant and the Insurer agree on the terms and conditions of the contract. The Insurer shall issue to the Applicant in good time an insurance policy or other insurance certificates on which the contents of the contract as mutually agreed upon by the insurance parties shall be stated.

Upon agreement by the Applicant and the Insurer, other forms of written agreement excluded by the stipulations of the preceding paragraph may also be adopted for the signing of an insurance contract.

Article 13. Upon the establishment of the insurance contract, the Applicant shall pay insurance premiums as agreed and the Insurer shall bear insurance liabilities starting from the time as agreed.

Article 14. Unless it is otherwise stipulated herein or in the insurance contract, the Applicant may terminate the insurance contract after the contract is concluded.

Article 15. Unless it is otherwise stipulated herein or in the insurance contract, the Insurer shall not terminate the insurance contract after the contract is concluded.

Article 16. With respect to the signing of an insurance contract, the Insurer shall explain the terms and contents of the insurance contract to the Applicant and may make inquiries about the subject matter insured and information related to the Insured, which the Applicant shall reply truthfully.

Where the Applicant intentionally withholds the truth or fails to perform the obligation of informing truthfully due to negligence and where such is sufficient to have a bearing on the Insurer in deciding whether or not to underwrite insurance or to increase the insurance premium, the Insurer shall have the right to terminate the insurance contract.

Where the Applicant intentionally fails to perform the obligation of informing truthfully, the Insurer shall not be liable for any loss or payment arising from the perils insured against before the contract is terminated and shall not refund the insurance premium.

If the Applicant fails to perform the obligation of informing truthfully due to negligence, and where such has a direct bearing on the occurrence of the insured events, the Insurer shall not be liable for any loss or payment arising from the events insured against before the contract is terminated, but may refund the insurance premium.

Insured events shall mean events included within the coverage of insurance liability as agreed in the insurance contract.

Article 17. With respect to any terms in the insurance contract related to the exemption of the Insurer's liabilities, the Insurer shall make such terms clear to the Applicant upon the establishment of the insurance contract. Where the Insurer fails to make such exemptions clear to the Applicant, such terms shall be null and void.

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