Guide for Directors and Senior Managers of Insurance Companies | China | Asia Pacific Insurance

Does the CEO, director or senior executives of an insurance company need to be registered or licensed by the insurance regulatory authority?

Approval from the China Insurance Regulatory Commission (CIRC) for the appointment of directors/senior management is required.

Is approval from the regulator required for the appointment of a director/senior management of an insurance company? Is there any distinction between persons acting in an executive capacity and persons in a non-executive capacity?

Yes. Approval from the CIRC is required for the appointment of directors/senior management of an insurance company. The approval requirement applies to all directors and senior management, whether they are executive directors or non-executive directors.

Is there generally any distinction between EDs and NEDs?

Yes. The PRC distinguishes between executive directors, non-executive directors and independent non-executive directors (INEDs). In relation to INEDs, there are specific requirements governing their eligibility, qualification, tenure and responsibilities.

Is approval from the regulator required for the resignation or removal of a director/senior management of an insurance company? Is there any distinction between EDs and NEDs?

No. However, the CIRC must be notified of the resignation or removal of directors/senior management.

Is there any nationality requirement for directors/senior management of an insurance company? If so, do any exemptions exist?

There is no express requirement.

Is there a minimum qualification or minimum number of years of relevant experience applicable to directors/senior management of an insurance company?

The chair of the board is required to have at least five years of finance-related experience or at least 10 years of economic-related experience. Directors and senior management are required to have at least five years of experience related to their proposed function.

Directors and senior management are required to satisfactorily complete certain insurance examinations prescribed by the CIRC.

Are there any other fitness and propriety requirements that apply to directors of an insurance company? What are they?

Yes. Candidates must satisfy the criteria of personal conduct, professional knowledge, business capability and job performance, among others.

Are there any other negative factors which will disqualify a candidate from becoming a director of an insurance company?

Yes, these include past convictions relating to fraud or dishonesty or other criminal offenses, being an undischarged bankrupt, or having been a director of an insolvent body corporate, among others.

Is there a residency requirement for directors/senior management of an insurance company (e.g., primary residence must be in each local jurisdiction)?

There is no express requirement.

Does the insurance company need to evaluate its directors/senior management before appointing such persons? What certifications, if any, must the insurance company provide to the insurance regulatory authority in respect of its directors/senior management?

Yes. An insurance company is generally expected to ensure that all its directors and senior management appointed are fit and proper persons. In relation to INEDs, the insurer is required to certify to the CIRC regarding the suitability and the independence of the INEDs. The insurer is also responsible for ensuring that all information furnished to the CIRC is accurate and complete and free of material
omission.

Generally, are there any distinctions in the duties and responsibilities or the regulatory treatment for EDs and NEDs?

Generally, the board is collectively responsible for the operations of the insurance company. However, INEDs are statutorily required to
exercise additional diligence in relation to matters such as material connected transaction and profits distribution proposals.

Are there any overarching duties and responsibilities for directors/senior management of insurance companies arising from insurance regulations (in addition to general corporate laws)?

Directors are responsible for the operations of the insurer, including compliance with applicable regulatory requirements. Directors are
specifically expected to remain loyal to the insurer, avoid conflicts of interest, and display a high standard of care, skill or diligence. Directors are also required to devote sufficient time to the affairs of the insurer and shall promptly attend board meetings. A director who does not attend a prescribed number of board meetings can be deemed incapable of performing his/her duties.

Will directors/senior management be personally liable for breach of insurance regulations by the insurance company? What penalties are there, if any?

Yes. The CIRC may impose orders to prohibit the relevant director/senior management from leaving the PRC and also impose freezing orders on the personal assets of the director/senior management.

Statutory penalties include fines and/or imprisonment and the quantum/length depends on the offenses committed.

Are directors/senior management of an insurance company subject to any periodic filing/notification requirements? What are they?

Generally, no periodic filings apply to directors. However, ad hoc filings may apply to resignation or cessation of appointment.

Performance audits are also required to be performed on directors/senior management periodically by an external audit firm. Audit reports need to be filed with the CIRC.

Is there a requirement on minimum number of the board of directors of an insurance company?

Yes. An insurer is encouraged to have a board of seven to 13 members.

Are there any rules around composition of the board of directors or equivalent (e.g., independence requirement or the number of executive- or management-level directors)?

Yes. Depending on the size of the insurer, at least one-third of the board of the insurer must be independent non-executive directors.

Insurers are encouraged to appoint an actuary as a director.

Are there any mandatory requirements for setting up of other committees (e.g., audit, remuneration committees)? If so, briefly describe the responsibilities of these committees.

Yes. Generally, depending on its size, an insurance company is expected to establish specialized committees. All committees are expected to
comprise directors of the insurer. For the audit committee, at least one member must possess audit or financial knowledge and experience.

Are directors of an insurance company permitted to hold other passive business interests (e.g., non-executive directorships and investments/shareholdings in other corporations)? What disclosures, if any, need to be made to the relevant regulatory authorities? Are there restrictions on the number of positions board members can hold?

Yes, provided that there is no conflict of interest and subject to an independence rule where the director concerned is an INED. In relation to INEDs, a declaration of independence needs to be filed with the CIRC at the time of the appointment, and they are not permitted to hold positions in other insurers that carry on similar lines of business. In addition, an INED cannot act as an INED for more than four companies at any given time.

Is there any requirement or prohibition for an insurance company to make a payment to its directors/senior management?

No specific requirement or prohibition on remuneration to directors/senior management.

However, corporate governance rules apply in respect of remuneration of senior management and other key personnel. For certain matters, such as subsidy payments to be made to INEDs, it will require approval from the shareholders in a general meeting.

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