CBIRC (China Banking and Insurance Regulatory Commission"
- Personal Insurance Supervision Department
- Wealth Management Subsidiaries Rules
- Notice on Strengthening Standardized Management and Promoting the Stable Development of Life Insurance Companies’ Annual Business
- 2017, April 21 - the CIRC issued a high-level guidance,
the CIRC Notice on Further Strengthening Risk
Prevention and Control of the Insurance Industry (“Risk
Prevention Notice”) - 2017, May 10 - the CIRC promulgated the Circular on Regulating the Development and Design of Products by Personal Insurance Companies (“ProductDevelopment Circular”)
- "The theme of the CIRC's [new] regulation is to ask insurers to offer protection-oriented long-term insurance policies, [while] not misleading customers [with wealth management functions]," said Li Jian, China insurance research partner at Hong Kong-based Autonomous Research Asia.
- The regulator argued that widespread selling of such products could create liquidity risks given the potential for severe asset-liability mismatches.
- During the kickoff sales period, life insurers in China tend to offer product packages that provide protective benefits with investment features, usually in the form of endowment or annuity policies combined with universal life insurance with guaranteed rates that behave like wealth management products.
- All told, the large, listed insurance companies such as China Life and Ping An Life Insurance Co. of China Ltd. will find it easier to adapt to the new environment because they generally rely on agents with strong knowledge of the products to pitch to customers and make sales, while smaller companies often use sales channels at banks whose staff have less product expertise, Ma said.
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Back in 2016, Anbang Insurance Group went from near-obscurity to become the fourth largest life insurer in China. This was made possible by the sale of ‘universal life insurance’ products that offer generous returns, short premium terms and low fees. Its fairy-tale run, however, came to an end after the riskiness of such policy terms caught the attention of regulators, who then stepped in to clamp down on insurers that abuse this product.
Under the slogan of “insurance means protection”, regulators have been pushing insurance companies to focus on protection-oriented insurance products, instead of acting as “wealth managers” and selling products containing nominal elements of risk protection.