China's railway authority mulls new insurance plan

China's railway authority is mulling a new compulsory liability insurance following a series of railway accidents, under a plan that has been submitted to the China Insurance Regulatory Commission (CIRC), reports said. Chang An Property and Liability Insurance said it has been exclusively negotiating with the Ministry of Railways over the project, the Securities Market Weekly reported. The insurance plan could cost the ministry 1.8 billion ($278 million) to 2 billion yuan in premiums annually, said an anonymous manager of the Beijing Hualong Century Investment Management Consultants, an underwriter of Chang An Insurance, adding that other issuance companies will also have a share once it is approved, said the Beijing Morning Post. Under the current accident insurance plan for Chinese rail passengers, which automatically charges 2 percent of the ticket price as premium, passengers are only entitled to a maximum compensation of 20,000 yuan in the event of an accident. In addition to 150,000 yuan compensation paid by railway authorities, a person's next of kin could technically get as much as 170,000 yuan in compensation if he or she dies in a rail accident. The situation drew widespread attention and controversy, especially after the Ningbo-Wenzhou railway accident in July that left 40 dead. Five scholars from the Insurance Institute of China wrote a letter to the State Council calling for the current "rail passenger accident compulsory insurance regulations" to be repealed and for a new rail carrier's liability insurance to be put in place, the Legal Daily reported. Jia Linqing, from the Renmin University of China, and one of the five authors of the letter, told the Legal Daily that such liability insurance was urgently needed in China, adding that authorities should also ensure that the insurance premium is not transferred to passengers.