BEIJING China’s word regulator is tightening a control over brief and mid-term life word products, in a bid to quell intensity risks from assertive insurers investing heavily in bonds and long-term resources regulating short-term funds.
The China Insurance Regulatory Commission (CIRC) is shortening a attention sum premiums from such products to between 500 billion yuan ($77.3 billion) and 550 billion yuan a year, from 650 billion yuan in 2015, pronounced Yuan Xucheng, executive of a life word organisation department.
The reduce turn would comment for rebate than 20 percent of sum premiums for China’s life word industry, Yuan said, a rebate from 27 percent in 2015. At present, 57 life word companies offered such products, he added.
“Insurance association boost should come from active risk control, not assertive investment,” Yuan told a press conference.
The new rules, effective from Monday, follow a shopping debauch by Chinese insurers in equities and genuine estate after CIRC loosened restrictions on word investment in 2014. In new months, Chinese insurers have been active in both abroad and domestic markets.
Yuan pronounced that fast expansion of short- and mid-term word products has caused regard about risk combined by a intensity asset-liability mismatch and liquidity conditions.
Short and mid-term life word refers to products where some-more than 60 percent of sum policies released are approaching to have rebate than 5 years effective duration, according to a new regulation.
Some word companies have been too assertive offered these policies, Yuan said, with some firms saying some-more than 90 percent of sum reward entrance from such products. He declined to name a insurers.
“Insurance companies shouldn’t sell quasi-wealth government products quite for investment purposes,” pronounced Yuan. “That’s not insurance,” he added.
Under a new rules, China’s life word companies need to immediately stop offered products in that some-more than 60 percent of policies are approaching to have rebate than a year duration, and gradually cut behind other short- and mid-term products.
Each organisation will be reserved a ceiling, depending on a capital. Those whose premiums from such products surpass a roof contingency boost collateral within 3 months to accommodate a requirement, according to a new rules.
($1 = 6.4659 Chinese yuan)
(Reporting by Shu Zhang and Matthew Miller; Editing by Richard Borsuk)