China announces investigations of unlawful acts concerning production safety responsibility insurance

China’s Ministry of Emergency Management on September 6 announced urgent implementation of measures to improve the production safety responsibility insurance system. To standardize and ensure the implementation of this system, the announcement clarifies management requirements for local departments of emergency management as well as severe punishment for unlawful acts.

Production safety responsibility insurance is commercial insurance where insurance organizations compensate for injuries and deaths as well as associated financial and other losses caused by production safety (industrial) accidents in companies engaged in production and business operations (生产经营单位) that have signed up for the insurance, and insurance organizations provide production safety accident prevention services for signed up companies. The Production Safety Law (安全生产法), as amended in June 2021, requires companies operating in dangerous industries to sign up for production safety responsibility insurance.

Requirements for local departments of emergency management

1. Implementation of the production safety responsibility insurance system in accordance with the laws and regulations:

Rigorously implement the insurance system in accordance with the relevant laws and regulations, such as the Production Safety Law and the Measures on the Implementation of Production Safety Responsibility Insurance (安全生产责任保险实施办法), to prevent and correct unlawful acts, including market monopolies

2. Self-investigation and self-supervision:

Immediately investigate and correct issues concerning monopolies; non-compliant management or use of the accident prevention technical service fund; accident prevention technical services; denial of the production safety license (安全生产许可证) to companies without production safety responsibility insurance; inappropriate clauses and prices of production safety responsibility insurance; insurance coverage; corruption; etc.

Investigation and punishment for unlawful acts

1. Transfer market monopoly cases to market regulation departments, where the cases are filed and violators are punished
2. Prohibit the denial of issuing a production safety license to companies without production safety responsibility insurance
3. Rigorously supervise and screen insurance organizations and promote standardization with respect to inappropriate clauses, prices and coverage of production safety responsibility insurance
4. Issue correction orders to insurance organizations that commit unlawful acts, don’t have a sufficient accident prevention fund, entrust accident prevention measures to an illegal entity, etc.; place insurance organizations disobeying the orders on the “blacklist” available to the public as a joint punishment for a production safety violation; charge organizations breaking relevant laws under the law
5. Crack down on corrupt conduct of senior government officials, including improper involvement with businesses and gaining illicit profits

The full text of the ministry’s announcement is available at
https://www.mem.gov.cn/gk/zfxxgkpt/fdzdgknr/202109/t20210907_397881.shtml