Regulatory Requirements on Transparency of Insurance Contracts to the Insureds in China

Abstract

To achieve the goal of transparency of an insurance contract to the insureds before concluding the contract, Chinese law adopts a number of approaches: first, insurers are required to explain the content of the contracts and to clearly explain the exclusion clauses to the insureds before the conclusion of a contract. Second, insurance contracts must be formulated transparently by the insurers and must meet the statutory requirements of the Insurance Law and regulatory requirements of the Insurance Supervision and Regulation Authority (ISRA). Third, the ISRA provides detailed regulatory rules to require insurers to disclose information of the products in a transparent manner. Fourth, the Insurance Law and the ISRA requires insurers and their salespersons to treat customers fairly and not to mislead them to purchase an unsuitable or inappropriate insurance product. In addition, as a general requirement of information transparency, the ISRA obliges insurers to disclose to the general public relevant and adequate information on a timely basis to give the potential insureds and market participants a clear view of the insurers’ business activities, performance and financial position. The purpose of this chapter is therefore to examine these approaches to see how transparency of insurance contracts can be achieved by insurance regulation in China.