- Background
With the opening of the Chinese market to the outside world, the interaction between China (excluding jurisdiction as Hong Kong, Macau and Taiwan for the purpose of this article) and the rest of the world in the insurance industry has become more frequent. China has the second largest insurance market in the world, which is very attractive to foreign insurance companies, more and more foreign insurance companies intend to explore business in the Chinese market and sell their insurance products to Chinese consumers.
- Regulatory Framework and Prohibited Promotional Activities in China
Insurance is a heavily regulated sector in China, which means activities of foreign insurance companies may also be regulated by Chinese authority in certain circumstances.
First of all, referring to Article 6 of the Insurance Law of the People’s Republic of China/中华人民共和国保险法, “Insurance businesses must be conducted by insurance companies established in accordance with this Law and other insurance organizations as stipulated in laws or administrative regulations. No other entity or individual may operate insurance businesses.” Although the above law does not elaborate on “insurance businesses”, in practice, insurance businesses usually include insurance sales, policy issuance, underwriting, claim assessment, claim settlement, etc.
Secondly, the National Administration of Financial Regulation (the “NAFR”, PRC insurance authority) and its former body also have issued several rules concerning this aspect. According to the Reply of the China Insurance Regulatory Commission on Issues Concerning the Crackdown on Illegal Sale of Overseas Policies (Bao Jian Ting Han [2005] No. 223) /中国保险监督管理委员会关于打击非法销售境外保单工作有关问题的复函（保监厅函〔2005〕223号）, the illegal sale of overseas insurance policies includes product introductions or promotional meetings held within China, insurance policy marketing activities carried out by people assigned to China by foreign insurance institutions, acts of arranging or organizing Chinese residents to buy insurance products outside of China, and other sales activities. Under the Notice of China Insurance Regulatory Commission on Issues Concerning the Proscription of Illegal Commercial Insurance Institutions and Illegal Business Activities of Commercial Insurance (Bao Jian Fa [2008] No. 63)/中国保险监督管理委员会关于取缔非法商业保险机构和非法商业保险业务活动有关问题的通知（保监发〔2008〕63号）, selling or facilitating the sale of insurance products for foreign insurance institutions or other institutions including but not limited to (i) arranging or organizing product exhibitions or promotional seminars in China for foreign insurance institutions; (ii) arranging or organizing foreign insurance institutions to sell insurance policies in China; and (iii) arranging or organizing Chinese residents to buy foreign insurance within/outside the territory of China, constitute illegal commercial insurance intermediary activities.
Furthermore, the Notice on Strengthening the Supervision of Illegal Sales of Overseas Insurance Products (Bao Jian Shou Xian [2016] No.46)/关于加强对非法销售境外保险产品行为监管工作的通知（保监寿险〔2016〕46号）specifies that, in case any act of publicizing or promoting overseas insurance products within the territory of China in the name of product introduction meetings, wealth management summits, lectures on wealth management knowledge, etc. or any act of arranging consumers to purchase insurance overseas constitutes an act of carrying out publicity or soliciting for the purpose of facilitating transactions. And the regulator reverses the right to “take actions towards foreign entities through relevant channels”.
In addition, public information shows that recently the regulator has made the following penalties against the acts of promoting and selling overseas insurance products in China:
(1) Shanghai Banking and Insurance Regulatory Bureau Fa[2019] N0.36/沪银保监保罚决字〔2019〕36号: Shanghai Fenwei Insurance Agency Co., Ltd. was punished for promoting overseas insurance products.
(2) Guangdong Banking and Insurance Regulatory Bureau Fa[2021] N0.44/粤银保监罚决字〔2021〕44号: Guangzhou Huakang Chuanghong Investment Co., Ltd. was punished for participating in the sale of overseas insurance products.
In sum, as a foreign entity without relevant insurance licenses in China, it is not eligible to sell or promote insurance products by itself or via the foreign entities, or in cooperation with Chinese entities, otherwise, it would be deemed as illegally operating insurance business in China.
- The Feasibility of Promoting Band and Logo by Foreign Insurers
In practice, some foreign insurers do not promote specific insurance products, but only promote the brand and logo of foreign insurance company, so as to facilitate their influence in the PRC market.
From the insurance regulatory perspective, insurance laws and regulations do not prohibit the promotion of insurance brand and logo by foreign insurance companies in that such activity is far from operating insurance business as described above. If a foreign insurance company only display its name and logo, without involving any specific insurance products, without demonstrating the coverage and premium rate of insurance product, in this regard, we consider promoting the insurance brand name and logo is not prohibited from the perspective of insurance regulations. In practice, we have not found any precedent in which the foreign insurance company has been punished due to the promotion of its band and logo (such as naming TV programs or sponsoring sports events) in China.
In terms of advertising regulation, according to Article 2 of the Advertising Law of the People’s Republic of China/中华人民共和国广告法 (“Advertising Law”), “The Law applies to all commercial advertising activities for direct or indirect introduction of products or services promoted by product operators or service providers via a certain channel and in a certain form within the territory of the People’s Republic of China.” Therefore, if a foreign insurance company promotes its brand name and logo via certain events in China, we consider it falls into the scope of advertising activities in China.
According to Article 9 of the Advertising Law, certain elements are prohibited in advertisements. Article 46 of the Advertising Law also provides that “Advertisements for medical treatment, pharmaceuticals, medical devices, agricultural pesticides, veterinary medicines and healthcare food, and other advertisements required to be reviewed by laws and administrative regulations shall be reviewed by the relevant authorities before they are published. No such advertisement may be published without being reviewed.” It can be observed that there are certain prohibitions and restrictions on advertising activities, and advertisements in certain fields are subject to review and approval by authorities before being published. If the brand name and logo of a foreign insurance company do not belong to the above prohibited items, nor do they fall into the scope of categories subject to mandatory review, then there is no substantial obstacle from the advertising regulatory perspective either.
- Conclusion
As analysed above, in relation to insurance and advertising regulation, we have not found prohibitive regulatory rules and precedents of penalties for the promotion of foreign insurance company’s brand and logo in China. However, given that the promotion of specific insurance products is still expressly prohibited, for foreign insurance companies intend to promote their brands and logos for the purpose of selling insurance products to Chinese consumers, the process from promotion to sale still needs to be carefully considered and designed so as to avoid touching the regulatory redline in China.
Article 9 of the Advertising Law, “Advertisements shall not involve any of the following activities:
(1) directly or indirectly using the National Flag, the National Anthem or the National Emblem, or the Army Flag, the Army Anthem or the Army Emblem of the People’s Republic of China;
(2) directly or indirectly using names or images of state organs or their functionaries;
(3) using “state-level”, “the highest-grade”, “the best” or other similar words;
(4) damaging the dignity or interest of the State, or revealing state secrets;
(5) hampering social stability or damaging social public interest;
(6) damaging personal or property safety, or revealing personal privacy;
(7) hampering the social public order or going against good social practice;
(8) containing any information suggesting obscenity, pornography, gambling, superstitious, terror or violence;
(9) containing any information of ethnic, racial, religious or sexual discrimination;
(10) hindering the protection of the environment, natural resources or cultural heritage; or(11) other activities prohibited under laws and regulations.”
