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China: New Measures on Travel Liability Insurance

(Jan. 6, 2011) On November 25, 2010, the National Tourism Administration (NTA) and the China Insurance Regulatory Commission (CIRC) issued the Measures on the Administration of Travel Agency Liability Insurance. The Measures, which will be in effect as of February 1, 2011, include provisions on the process of taking out insurance, compensation, supervision and inspection, and penalties. (Two Departments Jointly Issue the Measures for Administration of Travel Agency Liability Insurance, 45 ISINOLAW WEEKLY (Dec. 13-19, 2010), received via email from [email protected] (Dec. 24, 2010).)

The Measures prescribe that travel agencies established within the territory of the People's Republic of China (PRC) must purchase travel agency liability insurance and conclude a Travel Agency Liability Insurance Contract with an insurance company according to law (arts. 2 & 7). The insurance will include coverage of liability for compensation, borne by a travel agency in organizing tourism activities, for: personal injury to and property loss of tourists, and for personal injury to tour guides and tour leaders appointed by the travel agency who provide services to tourists (art. 4, ¶ 1). The circumstances in which a travel agency may incur liability for compensation include: negligence or fault; the occurrence of accidents; and other circumstances jointly determined by the NTA and the CIRC (art. 4, ¶ 2). (Id.; Measures on Administration of Travel Agency Liability Insurance [in Chinese] [hereinafter Measures], The Central People's Government of the PRC website (Dec. 13, 2010),

If any of the above types of circumstances occur, the Measures stipulate that the insurance company will make the payment within the liability limit established on the basis of the liability insurance contract. That limit “may be determined upon negotiation by the travel agency and the insurance company in light of the business scope, scale of operation and risk control capability of the travel agency, [the] local economic and social development level,” and the travel agency's own requirements. However, the limit of liability for personal injury is not to be less than RMB200,000 [about US$30,400] for each person” (art. 18). (ISINOLAW WEEKLY, supra.) Once the travel agency's compensation liability has been determined, the insurance company, at the agency's request, will pay the insurance money to the victims. If the travel agency fails to make the request, the victimized tourists, tour guides, or tour leaders have the right to directly request the company to pay the insurance money due them (art. 20, ¶ 3). (Id.; Measures, supra.)

Except as otherwise stipulated in the contract, the insurance company, after receiving the travel agency's request for a payment and the relevant certifications and materials, is to verify them and make a determination in a timely manner; in complicated situations, the company has 30 days within which to carry out this process. The company is to notify the travel agency and the victims of the results, and, where there is liability, pay out the insurance money within ten days after concluding an agreement with the travel agency to make the payment (art. 21). (ISINOLAW WEEKLY, supra; Measures, supra.)

The new Measures replace the Provisions on Travel Agencies' Taking Out Travel Agency Liability Insurance promulgated on May 15, 2001 (art. 32). (Measures, supra.)