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Untitled Document

THE INSURANCE LAW OF THE DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA


Adopted by Resolution No. 58 of the Standing Committee of the Supreme People’s Assembly on April 6, 1995,
amended by Decree No.383 of the Presidium of the Supreme People’s Assembly on February 4,1999, and
amended and supplemented by Decree No. 3038 of the Presidium of the Supreme People’s Assembly on May 16, 2002

Chapter 1. Fundamentals

Article 1. The Insurance Law of the DPRK shall contribute to the establishment of a strict system and order in insurance so as to defend the rights and interests of the insurer and the insured and develop the country’s economy and stabilize the people’s life.
Article 2.
Insurance shall be classified into personal insurance and property insurance.
The personal insurance shall include life insurance, accident insurance, child’s insurance and passenger insurance, and the property insurance shall include fire insurance, marine insurance, agricultural insurance, liability insurance and credit insurance.
Article 3.
The contract of insurance is the basis of insurance activity.
The State shall ensure that the insurer and the insured conclude a contract of insurance on an equal footing and perform it to the letter.
Article 4.
The State shall ensure that insurance business is effected on the principles of voluntariness, compulsoriness and trustworthiness.
Article 5.
Insurance business in the DPRK shall be undertaken by the State insurance administration institution and insurance companies.
In the special economic zone, foreign investors and overseas Korean compatriots insurance companies, and foreign insurance companies may set up their representative offices, branches or agencies.
Article 6. The State shall procure that the institutions, enterprises, associations and citizens of the DPRK, and the foreign bodies, foreign-invested businesses and foreign individuals resident in the territory of the DPRK that are seeking insurance take out policies from the insurance companies in the territory of the DPRK.
Article 7.
The State shall ensure that exchange and cooperation is promoted with foreign countries and international organizations in the field of insurance.
Article 8. International agreements on insurance approved by the DPRK shall take the same effect as that of this law.

Chapter 2. Contract of Insurance

Article 9. The contract of insurance shall be concluded in writing between the insurer and the insured.
The insured or the person who enters into the contract of insurance for the insured shall be a contractor of insurance.
Article 10.
As agreed in the contract of insurance, the policy holder shall pay the premium to the insurer and the insurer shall pay the insurance money or insurance indemnity to the policy holder.
Article 11. The insured shall not make an insurance contract unless he has an insurable interest. Any insurance contract without the insurable interest shall not be concluded.
Article 12.
Agreement shall be made in the insurance contract on the following items:
1. The name of the insurer,
2. The name and address of the policy holder,
3. The object insured,
4. The value insured,
5. The sum insured
6. The terms of insurance,
7. The duration of insurance and the date of beginning,
8. The premium and the method of its payment
9. The method of insurance compensation, and
10. Other necessary items.
Article 13.
At the time of entering into the contract of insurance the insurer shall provide the standard terms of contract for the policy holder and explain the contents.
The policy holder shall make a true disclosure to the insurer of information related to the insurance contract.
Article 14. The insurance contract shall be concluded when the insurer who has received the application for the insurance contract agrees to it and issues the insurance policy.
The form of the insurance policy shall be regulated by the State insurance administration institution.
Article 15.
Liability for the insurance compensation shall take effect from the moment when the insurer receives the total or partial amount of the premium from the policy holder as prescribed in the insurance policy.
The premium, upon the contract, may be paid either by lump sum or in instalments.
Article 16. If the policy holder fails to pay the premium within the prescribed period of time, the contract of insurance shall cease to be effective. The insurer may reduce the insurance money or the insurance indemnity pursuant to the relevant terms of the contract.
Article 17. In case the insurance contract ceases to be effective owing to the failure by the policy holder to pay the premium as prescribed in the contract, the policy holder may consult with the insurer to have the contract come into force again by paying the relevant amount of premium.
In case an agreement cannot be made on the recovery of the contract, the insurer may cancel the said contract.
Article 18. The insurer and the policy holder may consult and modify the contract within the term of the contract, except the insurance which is unmodifiable. The contents shall be clarified in the application for the insurance contract and the insurance policy.
Article 19.
The policy holder, in agreement with the insurer, may cancel the whole or part of the contract at any time before the insured events occur.
Accident insurance, marine insurance and the like shall not be cancelled.
Article 20. In case the policy holder causes an accident deliberately or demands insurance compensation on false return, the insurer may cancel the insurance contract, provided that the premium shall not be refunded.
Article 21. The reinsurance contract shall be concluded upon the approval of the State insurance administration institution. The reinsurance contract shall not affect the original insurance contract.
Article 22.
The insurance contract that damages the interests of the society and the collective or that is concluded in an illegal way shall not take effect.
The contract concluded after the insured event has taken place shall not take any effect, either.
Article 23.
The insurer may claim compensation to the third party on the insured event caused by the latter’s faults, provided that the policy holder submits necessary evidence.
Article 24. The claim for the insurance compensation shall be made within the period prescribed in the contract.
Article 25. The contract of insurance may be concluded through a middleman. The middleman shall conclude the contract for the person who wants to enter into an insurance contract.
Article 26. The insurance middleman shall conduct his business upon approval of the State insurance administration institution.
The middleman shall be held liable for any loss he has caused to the policy holder by his fault.

Chapter 3. Personal Insurance

Article 27. The object of personal insurance shall be the life or body of the insured.
Except the child’s insurance, the persons authenticated to be incompetent in civil procedure shall not be entitled to enter into a contract of personal insurance.
Article 28.
The insurer shall pay the specified amount of insurance money in case the policy holder of life insurance or child’s insurance is dead.
If the contract expires, the insurer shall make a maturity repayment to the policy holder who had paid the full amount of premium.
Article 29. Except the policy holder, the person who has the right of claims for the insurance money, shall be an insured beneficiary.
The insured beneficiary shall be selected by the insured.
Article 30.
In case the policy holder covered by the passenger insurance or accident insurance dies or becomes disabled, the insurer shall pay the appropriate insurance money.
The relevant medical organ shall examine whether or not the insured is capable of work..
Article 31. In case a person enters into the insurance contract on condition of another person’s death, the former shall obtain the latter’s agreement in writing.
The transfer of the right obtained by the insured event to a person other than the insured shall also necessitate the latter’s agreement in writing.
Article 32. Concerning the insurance concluded on condition of death, the insurer shall pay the insurance compensation even if the accident has been caused by the fault of the policy holder or the insured beneficiary.
Article 33. Any replacement of the insured beneficiary shall be notified to the insurer in writing.
The insurer, upon receiving information of the replacement of the insured beneficiary, shall specify the fact in the application for the insurance contract.
Article 34.
In case several persons are selected as insured beneficiary the distribution rate of insurance money shall be set individually.
The rate may be set equally on agreement.
Article 35.
A death benefit shall be paid to the heir of the policy holder in the following cases:
1. An insured beneficiary has not been decided on,
2. An insured beneficiary died earlier than the policy holder and no other beneficiary has been decided on, or
3. Although the insured beneficiary has lost or given up his right of claims for the insurance money, there is no other beneficiary.
Article 36. The insurer shall not be held liable to pay the insurance money for the loss and damage caused deliberately by the policy holder.
Concerning the insured events caused deliberately by the insured beneficiary, the insurer shall not be liable to pay the insurance money.
Article 37.
The insurer shall be entitled to receive compensation from a third party if it has paid insurance indemnity to the insured or to the insured beneficiary when the policy holder died, became injured or caught a disease by the fault of the third party.

Chapter 4. Property Insurance

Article 38. The property insurance shall cover the properties of the institutions, enterprises, organs and citizens. The object of the property insurance shall be measurable in value.
Article 39.
The insured value shall be the maximum limit for the sum insured.
No sum insured shall exceed the insured value.
Article 40. In case one object is insured in more than two insurances, the total amount of the insurance indemnity shall not exceed the sum insured.
The policy holder who has had one object in more than two insurances shall inform his reason to the relevant insurer.
Article 41. The insurer intending to renew the insurance policy shall reconsult with the policy holder on the object and value insured, specify them in the application for the insurance contract and reissue the insurance policy.
Article 42.
In case the sum insured is lower than the insured value, the insurer shall be liable for the compensation according to the ratio of the sum to the value insured. However, any specified agreement in the contract of insurance shall take effect.
Article 43. The insurer may, according to the insurance contract, inspect the management by the policy holder of the insured object and its safety and require to correct the defects revealed.
If the policy holder fails to properly manage the insured object, the insurer may raise the amount of premium or cancel the contract.
Article 44.
If the risk of the insured object or its insured value decreases, the insurer shall reduce the premium, calculate the amount of premium during the period of the decrease and give the amount back to the insured.
Any specified items in the contract shall take effect.
Article 45.
If the insurer is requested to cancel the contract before it takes effect, he shall refund to the policy holder the amount of premium after subtracting the service charge.
In case the insurer is requested to cancel the contract after the term of insurance begins, he shall refund to the policy holder the amount of money after subtracting the premium during the relevant period.
Article 46.
In case of partial loss of the object insured, except the insurance that cannot be cancelled during the period of contract, the insurer may pay the relevant amount of insurance indemnity and cancel the contract, provided that the policy holder is notified of it.
Article 47. In case the amount of insurance indemnity paid by the insurer equals to that of the insured value, the right of the policy holder to the object shall go over to the insurer.
Article 48.
In the event of damage caused by a third party, insurer may pay the insurance indemnity to the policy holder and make a claim for compensation to the third party within the limit. In case the insured has received compensation for damage from the third party, the insurer shall pay the insurance indemnity after subtracting the relevant amount.
Article 49. If the policy holder has given up the claim for compensation to a third party before the insurance indemnity is paid, the insurer shall not be held liable for the compensation.
In case the policy holder has given up the claim for compensation to a third party without agreement with the insurer after the insurance indemnity is paid, the insurer shall be entitled to be refunded with the amount compensated. If the claim for compensation has not been exercised to a third party due to a fault of the policy holder, the insurer may reduce the amount of insurance indemnity.
Article 50.
In the event of a damage caused by the policy holder to a third party in the liability insurance, the insurance indemnity shall be paid to the third party directly.
The expenses for arbitration and lawsuit related to the damage caused by the policy holder to a third party shall be borne by the insurer. However, any specific agreement in the contract shall take effect.
Article 51.
The expenses incurred by the policy holder in his effort to investigate and confirm the cause and scale of accident and prevent the increase of damage shall be borne by the insurer.

Chapter 5. Insurance Company

Article 52. The approval of establishment of an insurance company and the license of its business shall be issued by the State insurance administration institution.
Any insurance company whose establishment has not been approved and whose business has not been licensed shall not be entitled to undertake operation.
Article 53.
The conditions needed for establishing an insurance company are as follows:
1. Memorandum of association and its internal regulations,
2. Standard terms of the insurance contract and the tariff,
3. Registered funds designated,
4. Place of business and business facilities, and
5. Necessary staff.
Article 54. The institutions, enterprises and associations intending to set up an insurance company shall first submit for agreement to the State insurance administration institution the evidentiary documents confirming that the conditions for establishing the company have been met, the materials for the possibility of business and the materials related to bank, and then submit an application for establishing the company.
The form of the application shall be defined by the State insurance administration institution.
Article 55.
The State insurance administration institution shall examine the application for establishing an insurance company and approve or reject its establishment within 60 days.
If approved, the business licence of the insurance company shall be issued.
Article 56. The insurance company shall register itself within 30 days of the receipt of the business license.
Unregistered insurance companies shall not conduct their business.
Article 57. The business license of the insurance company, which has not been registered within 3 months of the receipt of the business license, shall be cancelled.
Article 58. The insurance company intending to set up its agency or office in the territory of the DPRK shall obtain approval of the State insurance administration institution.
The agency or office of the company shall be entitled to conduct its business only after making relevant registration.
Article 59. The insurance company shall conduct its business within the limits approved by the State insurance administration institution.
In case it wishes to change its name, memorandum, category of business, registered funds and place of business, it shall obtain approval.
Article 60. The insurance company shall have the minimum capacity to pay compensation and lay aside insurance fund.
The size of insurance fund and the method of creating the fund shall be set by the State insurance administration institution.
Article 61. The insurance company may designate its agents and conduct its business through them. In this case a list of the agents shall be prepared and the agents be registered.
Article 62.
The insurance agent shall conduct business by proxy within the authority attached by the insurance company and clarify the state of his business in a document.
The insurance company shall be responsible for its agent’s business.
Article 63. The agent of a life insurance company shall not be entitled to act for another life insurance company.
Article 64.
The insurance company shall properly prepare its business report, financial statements and profit and loss accounts within 3 months after the end of a financial year and submit them to the State insurance administration institution.

Chapter 6. Guidance and Control of Insurance Business and Settlement of Disputes

Article 65. The State insurance administration institution shall provide guidance and control over insurance activities.
The State insurance and administration institution shall improve the system and method of guidance for insurance activities in conformity with the demand of the developing insurance business and properly direct and control the business activities of the insurance companies.
Article 66.
The State insurance administration institution shall work as follows:
1. Draw up regulations and directives to carry out the insurance policy of the State and the Insurance Law,
2. Investigate and analyze the international insurance market and the trend of the development of insurance and notify the results to the insurance companies,
3. Approve the memorandum, the standard terms of the insurance contract, the tariff, types of business and their alteration,
4. Define the amount and minimum limit of the registered fund of the insurance company,
5. Monitor business activities of the insurance company, its branch , office and agent, and
6. Other activities authorized by the State.
Article 67.
The State insurance administration institution shall ensure that insured events are properly assessed and judged.
The assessment and judgement of insured events shall be conducted only by the specialized judgement institutions or officials who are qualified by the State.
Article 68. The relevant institutions, enterprises, associations and insurance companies shall keep the documents and materials concerning insurance work until the date defined.
Article 69. Penalties shall be imposed on the insurance companies or their business activities shall be suspended in the following cases:
1. The insurance company has been set up or operated without approval,
2. Unapproved standard terms of the insurance contract or tariff have been applied or categories of business have been changed without approval,
3. The financial statement or the profit and loss account is not drawn up truthfully or is fabricated,
4. Compensation has not been made or its amount has been reduced without due reason,
5. The name, memorandum, registered fund or place of business of the insurance company has been changed without approval,
6. Insurance fund has not been created, or has been used for other purposes without approval,
7. The company has been broken up or merged without approval, or
8. The personal insurance has dealt with incompetent persons except children.
Article 70. Penalties shall be imposed on the policy holder or the insured beneficiary in the following cases:
1. A damage has been caused deliberately and compensation has been made,
2. Indemnity has been made by a false report on the insured event, or
3. More than due indemnity has been made by fabricated documents.
Article 71.
Penalties shall be imposed on individual officials of the insurance company in the following cases:
1. They have instigated the insured , by abusing their power, to go through the procedures for the claim for compensation without any insurable interest or justifiable ground and had indemnity made,
2. They have deceived the policy holder or the insured beneficiary, or
3. They have led the policy holder or the insured beneficiary to an illegal act or colluded with the latter.
Article 72. If the insurance agent or middleman deceives the insurer, the policy holder or the insured beneficiary, the former shall be fined or have his business suspended.
Article 73.
In the event of serious consequences by the breach of this law, criminal charges shall be imposed according to the severity of the case.
Article 74. Disputes related to insurance business shall be settled through consultation.
In case of failure in consultation, they shall be referred to the court and the arbitration body of the DPRK.
They may be brought to the arbitration body of a third country upon agreement between the parties concerned.


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