Regulatory Landscape and Issues in Bancassurance
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Regulatory Landscape and Issues in Bancassurance Start Comparison
Who is the main regulator with oversight of bancassurance matters?

The China Banking and Insurance Regulatory Commission (CBIRC).

Is bancassurance a popular mode of distribution? What types of bancassurance partnership arrangements are available?

Yes.

Bancassurance partnerships are generally divided into the exclusive and non-exclusive arrangements.

What are the main parameters in negotiating a distribution agreement?

The salient terms are:

a) exclusivity;
b) term and renewal;
c) product development arrangements;
d) remuneration; and
e) the rights of use of bank's customer data.

Are insurance companies and banks required to hold any specific license (whether to be obtained on an ad hoc or ongoing basis) in order to enter into the distribution agreements to provide bancassurance services and products?

Yes, banks are required to have the part-time insurance agency license issued by the CBIRC.

Are there any legal or regulatory restrictions on the insurance company or the bank providing exclusivity to the other party?

There is no regulatory restriction for an insurer to appoint a bank as its exclusive distributor or the term/duration of the appointment. In addition, the CBIRC requires that in general, each bank outlet should only have bancassurance arrangement with no more than three insurance companies, unless the local branch of the CBIRC approves otherwise.

Assuming full exclusivity is not possible for legal or regulatory reasons, would the bank be able to grant the insurance company preferential treatment? If yes, under what conditions?

Yes, and the form of the preferential treatment is a matter of negotiation.

What type of engagement (if any) with the regulators would be legally required in connection with the negotiation/entering into of the distribution agreements?

Notification.

Would the insurance company and/or the bank be required to submit the distribution agreements (and any ancillary documents) to the regulators as part of any notification/approval process? If yes, do the regulators require any specific terms to be included in the distribution agreements?

The bancassurance agreement should be filed with CBIRC.

If the distribution agreements are submitted, would the regulators review/provide comments and require that the agreements be modified?

In practice, it is uncommon that regulator will comment on the terms, although the regulators have an extensive regulatory power to do so.

Would any antitrust/competition analysis have to be conducted with respect to the insurance company and/or the bank prior to entering into the distribution agreements?

It is advisable to do so.

What are the competition law considerations that might impact the term (e.g., duration) of a distribution agreement?

There is no official guideline on this point.

Under applicable laws and regulations, would the insurance company be allowed to use customer information (consisting of certain personal and demographic data) possessed by the bank to: (a) develop new products and refine marketing strategies, among others; (b) conduct its own telemarketing or direct mail activities; and (c) cross-sell products?

There is no specific law in this regard, but generally speaking, individuals have their privacy rights, hence it is advisable to obtain customer consent.

Are there any laws or regulations limiting or prohibiting the dissemination of customer information without the customers’ consent? Are customers allowed to waive any of these limitations or prohibitions?

Please see response to Question 12.

Are there any other prohibitions or limitations resulting from applicable privacy laws relating to the sharing of customer information for purposes of marketing and distribution of insurance products?

Please see response to Question 12.

Are there any prohibitions or limitations in respect of compensation arrangements for bancassurance transactions (up-front/staggered payments, commission payments, bonus payment schemes)?

Yes, there are guidelines on amount of commissions.

What are the sanctions for non-compliance with the prohibitions or limitations in respect of compensation arrangements?

No explicit sanctions, but CBIRC could request the relevant insurance company and the bank to rectify the non-compliant arrangement and impose a fine on them.

Would the regulators request information on compensation arrangements (for specific jurisdictions or globally)?

Bancassurance agreements must be filed with the regulators.

Are there any restrictions in relation to the classes of insurance products which may be offered pursuant to a bancassurance arrangement?

The products should be listed out in the bancassurance agreement.

Are there any products or product lines that the insurance company would be unable to offer to and distribute through the bank?

None.

Would the policy forms used by the insurance company have to be approved by any regulator? Would the insurance company own the intellectual property rights relating to such policy forms?

Insurance products should either be approved or filed with the CBIRC.

Are there any prohibitions or limitations in respect of co-branding between the bank and the insurance company?

No specific prohibition, but the regulators will always have the power to raise requisitions and concerns if it creates market confusion.

Would the bank personnel be required to hold any specific license in order to distribute the insurance products? Are there any reasons why bank personnel may be prohibited from distributing insurance products?

CBIRC generally disallows insurance companies from dispatching their sales personnel to bank outlets. 

If the sales person is employed by the bank: (a) is the insurance company required to have oversight or provide special training; and (b) are there applicable laws and regulations allowing the insurance company to compensate the bank for the service provided by its sales personnel?

a) There is no statutory requirement for training or oversight responsibility by the insurer. However, it is common for the insurer to provide training to the bank personnel.
b) There are rules as to how insurers should compensate the bank.

If the sales person is employed by the insurance company, are there any restrictions on their access to the bank’s branches?

CBIRC generally disallows insurance companies from dispatching their sales personnel to bank outlets.

Are banks allowed to lease space to insurance companies to market its products in the bank’s branches?

Not a common practice in China.

Are there any investment requirements (e.g., minimum stake to be held by the insurance company in its distribution partner) or any other similar legal or regulatory obligations that may affect the insurance company’s ability to enter into the distribution agreements?

None.

Are there any recent (or pending) developments in laws and regulations that may be relevant to the negotiation and/or the entering into of the distribution agreements (or the provision of services by the insurance company and/or the bank pursuant thereto)?

None.

Are there any other issues that may affect the insurance company’s ability to enter into the distribution agreements and provide bancassurance services on an ongoing basis to the bank?

None.