On 29th April 2019, China’s Banking & Insurance Regulatory Commission (CBIRC) published a draft discussion paper, seeking public feedback, entitled ‘Notice Concerning Standardising the Traceability & Identification involved in Internet Sales of Insurance Products’ (Draft). The Draft aims to strengthen regulation of online selling of insurance products (Online Selling). The Draft contains a large number of highly detailed and meticulously drafted provisions, which is a response to and reflects CBIRC’s position on recent wide-spread discussion about problems associated with Online Selling in China.
A selection of some of the key points contained in the Draft are:
- Re-affirmation of the absolute requirement that an applicant policy-holder (Applicant), in applying for a policy of insurance and thereby providing his/her consent, completing policy application forms and providing other application details (Application Details), provides such Application Details directly via a CBIRC-regulated insurer’s or intermediary’s (collectively Insurance Entity) own, self-operated, commercial online platform (Insurance Entity’s Platform). Applicants are expressly forbidden from providing such Application Details to any non-Insurance Entity. This requirement concerning Application Details mirrors regulation adopted by the (then) China Banking Regulatory Commission in respect of banking products.
- In circumstances where a Insurance Entity is utilising the services of a third party online platform provider to conduct marketing activities linked to the Insurance Entity’s Online Selling, and where such marketing is ostensibly being conducted in the name of the third party (and not in the name of the Insurance Entity), then such third party platform must contain clear language explaining to the Applicant (Explanation) that what is being marketed is in fact an insurance product. This Explanation may contain a link to the Insurance Entity’s Platform, but in order to access this link (and therefore access the Insurance Entity’s Platform), the Applicant must provide his/her express prior consent. If the Applicant does provide his/her express prior consent, then the Applicant will be directed to the Insurance Entity’s Platform to undertake Online Selling procedures.
- Any CBIRC-regulated intermediary (Intermediary) undertaking Online Selling must, in relation to products (Product) which are the subject of such Online Selling, explain to an Applicant (i) which entity is the marketing the Product; and (ii) which entity is underwriting the Product (Underwriter). In circumstances where the Intermediary is ostensibly offering to the Applicant a number of different Underwriters - for one and the same Product - then the Intermediary must list all such Underwriters one-by-one, and must clearly give to the Applicant the right to select the Underwriter of the Applicant’s choice. The Intermediary must not in any circumstances deprive the Applicant of his/her right to choose the Underwriter.
- All tracing and identifying information and documentation associated with any Online Selling (Records) must be retained for a minimum of (i) five years for short-terms products (terms of 12 months or less); or (ii) ten years for long-term products. In circumstances where an Applicant’s complaint concerning Online Selling has led to formal dispute resolution proceedings, then all Records associated with such complaint must be retained for at least two years post-finalisation of such dispute resolution proceedings.