Is it possible for an insurance company to go bankrupt?

According to Article 92 of People's Republic of China (PRC) Insurance Law, insurance companies engaged in life insurance business may face bankruptcy. In this case, the life insurance contract and the corresponding liability reserve held by it must be transferred to other insurance companies engaged in life insurance business. If the transfer agreement cannot be reached with other insurance companies, the insurance company operating life insurance business designated by the State Council Insurance Regulatory Authority shall accept the transfer.

The legitimate rights and interests of the insured and the beneficiary shall be safeguarded in the process of assignment or acceptance of assignment designated by the the State Council Insurance Regulatory Authority. For insured customers, if they hold long-term insurance policies, such as critical illness insurance, long-term million medical insurance, life insurance, annuity insurance, etc., their rights and interests will not be affected. Even if the insurance company goes bankrupt, the rights and interests of the policy will be transferred to the insurance company that takes over.

It is worth mentioning that the benefit clauses written in the policy will not be affected. However, if a secondary value-added clause such as universal account is attached to the policy, the settlement interest rate of universal account will be relatively high when the insurance company operates well. However, the guaranteed interest rate of universal account is usually between 1.75-3%. If the insurance company goes bankrupt, it may have a certain impact on these additional universal accounts.