BEIJING - China's State Council, or cabinet, has decided to abolish a decades-long compulsory accident insurance regulation on railway transport in a bid to better protect passengers' interests.

According to a statement posted on the central government's website Friday, the regulation, which enables railway operators to invariably charge all train passengers 2 percent of their ticket prices as accident insurance, will be annulled starting Jan 1, 2013.

The regulation, created in 1951 and amended in 1992, places a cap on the insurance compensation at 20,000 yuan ($3,180) regardless of the classes of passenger seats.

The stipulation has been widely criticized as unfair and contradictory to the country's insurance law, which states that insurance contracts should be formed on a voluntary basis.

The country ended similar accident insurances for ship and plan travellers in 1987 and 1989, respectively.

The statement also abrogated a provision in a railway accident emergency rescue regulation, which sets a maximum 150,000 yuan of compensation on accident casualties and 2,000 yuan on baggage losses for each passenger.

The provision's removal, which will also come into effect next year, will allow passengers to ink higher compensation casualty insurance policy with railway operators, analysts said.

Victims in a train crash in East China's Zhejiang province last July received more than 900,000 yuan in compensation each. The accident killed at least 43 people and injured more than 200 others.