Total insurance assets in China have increased from 5 trillion yuan ($767 billion) in 2010 to 12 trillion yuan in 2015, according to figures from the China Insurance Regulatory Commission (CIRC). Fueled by the growing middle class in the country as well as the increasing awareness of security and long-term savings, insurance businesses have prospered.

At the same time, regulators have made an effort to cultivate a more mature legal structure to cope with the thriving sector. Jin Yi, head of the legal department at Taikang Life Insurance, talks about his views on how the leading insurer is adjusting to the changing regulatory environment, and also how the legal department can actively contribute to the company’s strategic business growth.

ALB: Along with the rapid development in China’s insurance industry, there have been a lot of changes and new issues emerging. How has the legal landscape of the insurance sector in China changed?

Jin Yi: The regulators have stepped up to strengthen the supervision. We can see this from the constant updates of the Insurance Law [of China]. Besides that, which is the basic framework, new detailed rules, guidelines and measures are issued on a regular basis.

Also the focus now is more about requirements on companies’ solvency. The regulatory concept now liberalizes the front-end and controls the back-end, which I think is in the right direction. There will be endless issues in terms of operation models and details of different practices and it is hard to cover everything. Regarding solvency, which could be clearly calculated, it could guard the bottom line risks and effectively protect the interests of insurance consumers.

This is good news as the regulatory environment becomes more mature; however, it is also challenging for us as new rules are issued constantly. We need to closely follow all these amendments and updates, not only from the CIRC but also from finance-related regulators, for example the central bank, which also has a lot of impact on the insurance sector, particularly in the aspect of anti-money laundering.

ALB: As you mentioned, the insurance sector is not only regulated by the CIRC but also other related authorities. How do you find it special in terms of the legal issues of an insurance company in China compared to enterprises in other sectors?

Jin Yi: Insurance is also a financial tool. Unlike stocks or savings, which we talk about or use every day, it is more complicated. For example, life insurance is actually long-term asset management.

Now many industry players see insurance as a hot pool of money for further investment in various sectors. Regulations in insurance that look at the insurance contract or the procedure of selling and buying insurance are just a very small part. A major job is to look at how to use the insurance capital properly.

Also, now there are more and more cross-financial-sector businesses or even cross-industry business. This is a very common expansion strategy among China’s insurance companies. A legal professional with an insurance company needs to get familiar with many more rules nowadays.

ALB: Taikang just announced a deal, purchasing a 13.5 percent stake in Sotheby’s. Has Taikang stepped into other sectors as well? Different sectors have different specific regulations. How can Taikang ensure its practices are in accordance with all relevant rules?

Jin Yi: We actually have invested in many different sectors. For example, we are committed to the development of the retirement community and health industry. An innovative model integrating medical services and elderly care was implemented. Among the elderly care communities being built in eight cities nationwide, Beijing’s Yan Garden was successfully put into operation. Substantial progress has been achieved in setting up a medical service system, featuring investment in hospitals and the operation of the first rehabilitation hospital in one of the elderly care communities. In these two sectors, regulations that our legal team should look at include, but are not limited to, guidelines related to property, healthcare and elderly care.

Tons of clauses and new amendments are issued constantly. It is not possible for us to check them one by one every day; however, it is our responsibility to make sure our practices fully comply with all related rules. So establishing a system is the key. We’ve assigned specialized staff and established our own database of these laws, new announcements and institution guidelines so it is more efficient for us to follow changes.

ALB: In 2015, Taikang Online Property and Insurance, along with Yi An Property and Casualty Insurance and An Xin Property and Casualty Insurance, was approved by the CIRC and became one of the first three online insurance companies. Along with opportunities, the Internet also brings uncertainties, legal risks in particular. Do you see this online business adding more challenges to the legal department? How is your team coping with all the new issues?

Jin Yi: There are a lot more new challenges and the one word that we’ve used and heard a lot is “disruption.” It has changed a lot of concepts. One main reason is that supervision targeting online practices is still not that mature. Some boundaries are not very clear and when we are testing innovative models or strategies with this online platform, it is not easy to define whether they have violated the rules or not.

Although we can call for a sophisticated and clear inspection system, it is not something we can control. What we can do is to help the company set a risk appetite based on the current legal structure, which will directly decide what we can try with the Internet and how far we would like to go.

Also, we should not isolate the concept of “online.” We should integrate this concept into our routine work, for example document compliance.

ALB: As you mentioned earlier, money and human resources are required to establish a legal affairs system. This means it is a cost to the company. Then do you think the legal department could create value for the company? How can you help your legal team to achieve that?

Jin Yi: If a company does not have a mature mechanism to closely follow the changing regulatory environment and manage legal risks, it would experience a hemorrhage once it gets punished for not complying with related rules.

In Taikang, we are actively building up a new team with several core staff, specializing in intellectual property management. With the expansion of our online insurance business, we realized that this is the future and technology will be the main competitiveness of any business, particularly in financial markets. We need to protect our own technology under our IP (intellectual property) management. This in the future is also the value that our legal team could contribute to the company.

A leader of an in-house legal team should not make his judgment only based on the law and his legal profession. We should integrate our work into the business operation of the company.

Legal professionals tend to take conservative approaches as we are educated and required to be rigorous. This is good, but the leader of a corporate legal team should also inspire team members to think outside of the box and be innovative. It is also important to have better communication with other departments, as not everyone is as familiar with those regulations as us. For example, a legal proposal we hand in to a manager or the board should not be like those documents we were taught to submit to the court. We need to put the conclusion at the beginning as it is for decision-making instead of deductive reasoning.