On The New Insurance Law And Personal Insurance

On February 2009, the Standing Committee of the National People's Congress of China passed , and came into effect on October 1st that year. This paper summarizes the major ideas behind this amendment and their concrete embodiments, and mainly probes into the improvements on the aspect of insurance contract and their influence on the business of insurance companies.The 2009 amendments of the Insurance Law are underpinned by the following principles: that the insured should not be disadvantaged; that insurance business rules should be improved for sake of scientific development; that government regulation on the insurance industry should be strengthened to anticipate and diminish risks; and that sound market order should be maintained and legal rights and duties must be unambiguous. These principles are embodied in many concrete provisions.The impacts of the amended Insurance Law on the business of life insurance companies are many, to mention the most important one: It puts more limitations on the insurer's right to terminate the insurance conctract, and sets'incontestability clause'on the part of insurer.In response to the application of the amended Insurance Law, life insurance companies have taken various adjustment strategies. By comparing national business data of life insurance before and after the 2009 amendment of Insurance Law, such as insurance premium income, compensation payments expenditures, and business and management costs, it is apparent that the business capability of insurance companies experienced a mild rise rather than fall after 2009 amendment of Insurance Law. Data from a large domestic insurance company on risk rates for long-term insurance policies, which is a key indicator for business quality and soundness, also show that the 2009 amendment has not produced negative impacts on life insurance business, despite the introduction of some new provisions like"uncontestability clause". However, some problems and setbacks still remain much with life insurance companies, and this paper offers a number of tentative recommendations on them.