China releases draft amendments to Insurance Law for public comment

China's National Financial Regulatory Administration has released a draft amendment to the Insurance Law for public consultation. The revision aims to address the limitations of the current law, which has seen various updates since its 1995 implementation, by adapting to a more complex and diverse risk environment.

Key pillars of the proposed amendment include strengthening shareholder oversight by bringing actual controllers under regulatory scrutiny to prevent capital withdrawal and asset misappropriation. The draft also seeks to enhance prudential supervision by mandating robust corporate governance, risk management, and asset-liability management.

Furthermore, the amendment focuses on improving risk disposal mechanisms, including market exit rules and the role of insurance security funds. To bolster consumer protection, the draft proposes refining insurance contract rules, clarifying prohibited behaviors for institutions, and codifying practices such as the 'cooling-off period' to mitigate information asymmetry. Finally, the proposal intends to increase the costs of non-compliance by expanding the scope of legal liability and increasing fine magnitudes.