On September 4, the National Financial Regulatory Administration (NFRA) initiated a public comment period on the draft amendment to the Insurance Law of the People's Republic of China. The draft, structured across eight chapters and 214 articles, touches upon insurer market access, oversight of shareholders and actual controllers, solvency requirements, asset-liability management, insurance fund utilization, risk resolution, and consumer protection. This revision marks a significant update to the current Insurance Law, which was last amended in 2015.
Earlier, on June 17, Ding Xiangqun, head of the NFRA, stated at the 2026 Lujiazui Forum that efforts would be accelerated to finalize amendments to the Banking Law and the Insurance Law, with targeted improvements to regulatory frameworks to boost their adaptability to financial practices. The NFRA noted in its drafting explanation that the rapid expansion and increasingly complex risk landscape of China's insurance market have laid bare the inadequacies of the existing law, including insufficient regulatory coverage, limited enforcement authority, weak punitive measures, low compliance costs for institutions, and subpar consumer protection. Additionally, current provisions on risk handling and market exit are overly broad, while legal backing for penetrating supervision of shareholders is both insufficient and lacking in applicability.
It is noteworthy that several forms of insurance fund utilization listed in the draft are not entirely new investment avenues. In recent years, the regulatory body has progressively widened the scope for insurance capital in areas such as equity, financial products, gold, and derivatives through departmental rules, normative documents, and pilot schemes. The key shift in this revision is the elevation of these practices to the statutory level within the Insurance Law.
Minimum Capital Requirement for Insurers Raised to 1 Billion Yuan from 200 Million Yuan
A notable tightening of entry standards sees the minimum registered capital for establishing an insurer climb to 1 billion yuan, up from the previous 200 million yuan, with the stipulation that it must be paid-in monetary capital. The State Council's insurance regulator retains the authority to adjust this floor based on an insurer's business scope and scale, but it cannot be set below the new 1 billion yuan threshold.
Beyond the capital bar, the draft strengthens scrutiny over major shareholders and actual controllers. It mandates that these parties exhibit sound financial health, a clean record with no major violations in the last three years, and a net asset level meeting regulatory standards. Additionally, the controlling shareholders and actual controllers of major shareholders must also satisfy regulatory requirements. Shareholders are obligated to inject capital using their own funds, barring state-mandated exceptions, and the regulator will review their funding sources, financial status, capital replenishment capability, and integrity.
The draft also brings shareholders and actual controllers of insurance institutions more firmly under the regulatory umbrella. The NFRA's explanation highlights a push to reinforce qualification reviews, clarify shareholder duties, including reporting of related-party transactions and information disclosure, and prohibit practices like equity holding on behalf of others and improper interference in corporate governance. Enforcement measures are sharpened as well: for violations of prudent operating rules that threaten an insurer's stability, regulators can compel major shareholders to inject capital or provide liquidity support within a set timeframe, order responsible shareholders or actual controllers to transfer equity or relinquish control, restrict their rights, limit dividend distributions to at-fault shareholders, or demand the return of dividends already paid out within a specified period.
Expanded Investment Channels and New Asset-Liability Management Requirements
The revision also overhauls rules on insurance fund deployment, building on the current law's principles of prudence and safety, which currently permit investments in bank deposits, securities such as bonds, stocks, and fund shares, real estate, and other forms designated by the State Council. The draft extends the scope of fund usage entities to explicitly include both insurance companies and insurance asset management companies, requiring them to possess adequate investment management capabilities while adhering to prudential and safety standards.
In terms of specific instruments, the draft adds equity, asset management products, asset-backed securities, gold and other commodities, as well as futures and derivatives trading to the list of permissible investment forms. It also mandates regulatory approval for major equity investments and for obtaining overseas investment qualifications. For insurance asset management companies, the draft provides a more comprehensive framework, allowing insurers to establish such entities that can engage in managing insurance funds and issuing asset management products. These companies, along with their shareholders and actual controllers, will be subject to the same provisions under the Insurance Law as insurers, with specific administrative measures to be crafted by the State Council's regulator.
Simultaneously, the draft introduces new mandates for asset-liability management, requiring insurers to establish robust systems that guarantee reasonable alignment between assets and liabilities in terms of maturity structure, cost-benefit ratios, and liquidity, thereby mitigating mismatches.
Enhanced Risk Resolution Tools and Refined Insurance Protection Fund System
Another pillar of this amendment is the fortification of risk handling mechanisms for insurers. The NFRA noted that current rules are overly general, but recent experiences in resolving insurer risks have yielded lessons that need codification into law. The draft diversifies the regulatory toolkit for addressing insurer risks, adding measures like restricting business scope, scale, or counterparties, capping dividends to shareholders, limiting executive compensation and benefits, constraining investment forms and ratios, mandating asset or business transfers, and halting new business acceptance. It also introduces instruments such as forcing conversion or write-down of capital instruments, compelling major shareholders to provide capital or liquidity support, and ordering responsible shareholders or actual controllers to divest equity or transfer control.
In the second quarter of this year, the Shanghai Financial Regulatory Bureau applied such measures in a decision against a life insurer, requiring a capital increase within one year to achieve solvency adequacy, freezing executive pay at previous year levels until solvency is met, and restricting shareholder dividends. This instance illustrates that some of the draft's new tools have already been exercised in practice, and the revision seeks to enshrine them at the legislative level.
The draft also refines the insurance protection fund system, explicitly designating it as a non-governmental industry risk relief fund. Its activation triggers now extend beyond insurer bankruptcy or revocation to include scenarios where an insurer faces major risks requiring market exit. In situations posing severe threats to market order or policyholder rights, the fund may participate in risk resolution as prescribed. Under the draft, assistance from the fund is capped, with any shortfall recoverable from the liquidation assets of the revoked or bankrupt insurer by policyholders, insured parties, and beneficiaries. The fund management entity, within the relief limits, acquires the same priority claims against the insurer as these stakeholders.
Consumer protection also takes center stage, with the draft compelling insurers to shoulder primary responsibility, improving dispute mediation mechanisms, adding personal information safeguards, banning misleading sales practices, and aligning contract provisions with the Civil Code, such as codifying the "cooling-off period" into law. Alongside expanded regulatory scope, penalties for violations are set to rise. The NFRA underscored a principle of proportionate punishment, combining fines with forfeiture, broadening legal liability coverage, and raising fine levels to deter misconduct and prevent outcomes where penalties fail to match the harm or the ill-gotten gains.