Regulators target risk in insurance industry – China’s latest business and technology news
After “years of booming growth amid lax supervision,” the insurance sector is finally getting attention from China’s famously risk-averse administrators, Caixin reported on October 8. The magazine said, “Not a single license for a new insurer has been issued since April, compared to six issued in the first two months.” April, of course, is when it was announced that Xiang Junbo 项俊波 was being investigated for corruption at his post at the China Insurance Regulatory Commission (CIRC).
The CIRC has since drafted and begun to implement a number of measures to tamp down risk in the industry:
- A set of rules went into effect on October 1 that are “expected to halt sales of some popular insurance policies that offered insurers quick access to funding but proved risky for investors.”
- In August, the CIRC released a draft document that proposed to reduce how much a single shareholder in an insurance company can hold from 51 percent to 33 percent, and also restrict company fundraising activities.
- On October 12, Caixin reported that the CIRC is also “soliciting opinions on a new draft guideline covering internal controls over the use of insurance funds,” which are expected to “establish an anti-corruption system aimed at curbing the transfer of illegitimate interests” by the end of this year.
- Bloomberg reports that following HNA’s Bohai Life Insurance’s failure to properly report some transactions and meet regulatory requirements, the CIRC has issued a six-month ban on “direct and indirect transactions — including loans and financial aid” between it and other HNA companies.
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