China Amends Its Insurance Law

On February 28, 2009, the Standing Committee of the National People's Congress of China adopted the long-awaited amendment to the current insurance law (the "New Insurance Law"). The new law will come into effect on October 1, 2009.

Background

China's insurance law was first enacted in 1995. The insurance law was subsequently amended in 2002 to accommodate China's commitments to the World Trade Organization. The New Insurance Law is the result of seven years' extensive debate and consultation since the 2002 amendment. Although the full impact of the amendment remains to be seen, the New Insurance Law has the following main legislative aims: to provide more protection to legitimate rights of the insured; to strengthen regulatory supervision of insurance companies and ensure that insurance companies remain financially sound financial institutions; to broaden the business scope of insurance companies; and to establish a higher standard for the industry.