The regulatory authorities intend to standardize the liability insurance business： it is forbidden to underwrite seven types of risks, such as credit risk.
On September 5th, The Paper learned from insiders that the Regulation Measures for Liability Insurance Business (Draft for Comment) (hereinafter referred to as the "Measures") drafted by China Banking and Insurance Regulatory Commission Property Insurance Department has been solicited for comments in the industry.
The Measures require that insurance companies should continuously enrich liability insurance products, improve insurance services, raise the level of protection, focus on major strategies, serve the real economy, and actively play the positive role of liability insurance in participating in social governance, resolving contradictions and disputes, and safeguarding and improving people’s livelihood.
Some insiders told The Paper that the "Measures" reflected the importance attached by the regulatory authorities to liability insurance. With the development of society, the role of liability insurance in social governance has become more and more obvious. With the continuous improvement of the rule of law, the liability insurance market is also growing, so supervision began to encourage and standardize the development of the liability insurance market. In addition, everyone used to compete in the field of auto insurance, and the competition has been excessive. The supervision also intends to guide the development direction of the industry and better promote the development of the insurance industry to the non-auto insurance field.
The so-called liability insurance refers to the insurance subject matter of the insured’s liability for compensation to a third party according to law.
In terms of business rules, the Measures clearly point out that insurance companies whose business scope includes liability insurance can operate liability insurance business. When an insurance company engages in liability insurance business, it shall comply with the solvency supervision requirements, scientifically evaluate its own risk management and control capabilities and customer service capabilities, and reasonably determine the types of insurance and areas it operates. When developing liability insurance products, insurance companies shall not violate insurance principles, public order and good customs, and shall not harm public interests and the legitimate rights and interests of insurance consumers.
According to the Measures, insurance companies should accurately grasp the definition of liability insurance, clarify related concepts and the relationship between rights and obligations, and strictly define the scope of insurable risks.The following risks shall not be covered by liability insurance: the liability for compensation caused by the insured’s intentional manufacturing of insurance accidents; Criminal fines and administrative fines; Obligation to perform; Credit risk; Risk loss that will not occur or is determined to occur; Speculative risk with both loss possibility and profit opportunity; Other risks specified by China Banking and Insurance Regulatory Commission.
The "Measures" also specifically lists that when insurance companies carry out liability insurance business,Seven business behaviors that may not exist, including:
(1) Failing to use the approved or filed insurance clauses and insurance premium rates in accordance with regulations, including but not limited to changing the approved or filed insurance products by means of special agreement in the policy or signing supplementary agreements;
(two) misleading the insured and the insured by exaggerating the scope of insurance coverage, concealing the exemption of liability, and making false propaganda;
(3) Substantially underwrite financing credit risk in the form of guarantee liability;
(four) to carry out unfair competition by means of interest transfer and commercial bribery;
(5) Making a promise that does not conform to the insurance principle;
(6) Eliminating or restricting competition through intermediaries, trade associations or other organizations;
(seven) other acts stipulated by China Banking and Insurance Regulatory Commission.
The "Measures" emphasize that insurance companies should clarify the relationship between liability insurance and property loss insurance, credit insurance, guarantee insurance, accident insurance and other types of insurance, reasonably determine the types of insurance, consciously maintain the market competition order, and must not harm the legitimate rights and interests of other insurance companies or consumers.
When participating in liability insurance projects organized by government departments at all levels, insurance companies shall strengthen communication with government departments, policyholders and insured persons, and shall not blindly expand the scope of protection. Those that are not covered by liability insurance shall not be underwritten in the name of liability insurance.
As far as service contracts are concerned, the Measures require that if liability insurance products provide insurance services, their shared costs shall not exceed 20% of the signing premium, and the main contents of insurance services shall be clearly defined in the terms. Services exceeding the above limits shall be provided separately and shall not be included in the premium. Where an insurance company provides insurance services alone, it shall sign an insurance service contract and indicate the service content and service price in the contract.
In addition, insurance companies should formulate data security management systems, strengthen data security management capabilities, and must not disclose the information of the parties to the insurance contract, or engage in any activities that have nothing to do with the insurance business or harm the interests of the insured and the insured.