In­surance curbs bite into in­comes

China Daily (Hong Kong) - - BUSINESS -

mid and short-term poli­cies such as uni­ver­sal life in­surance, a type of in­vest­ment-fo­cused life pol­icy.

The pro­por­tion should be kept below 50 per­cent of in­sur­ers’ pre­mium in­come and the reg­u­la­tor has sus­pended the ap­proval of new branches of in­sur­ers who fail to meet the re­quire­ment.

Pre­mi­ums from uni­ver­sal life in­surance ac­counted for 17.4 per­cent of life in­sur­ers’ to­tal pre­mium in­come in the first half of the year, de­clin­ing by 19.45 per­cent­age points from the end of last year, ac­cord­ing to the CIRC.

The surge of uni­ver­sal life in­surance prod­ucts caught the reg­u­la­tor’s at­ten­tion, mak­ing it con­cerned that the ex­ces­sive use of such poli­cies could cause risks through a mis­match of as­sets and li­a­bil­i­ties. It is be­lieved that many in­sur­ers sought to fund their over­seas in­vest­ments by sell­ing short-term high-yield life poli­cies at home.

At Thurs­day’s news con­fer­ence, the CIRC de­nied me­dia re­ports that the gi­ant in­surer, An­bang In­surance Group Co, was told by the reg­u­la­tor to sell its over­seas as­sets. A CIRC of­fi­cial said that it did not is­sue such a re­quire­ment and has no plans of do­ing so.

Cao Jing, se­nior man­ager of ac­count­ing firm Ernst & Young’s China ac­tu­ar­ial and in­surance risk ad­vi­sory ser­vices, said that the slower pre­mium growth was in line with ex­pec­ta­tion as stricter reg­u­la­tions would help cool the in­vest­ment-fo­cused in­surance mar­ket.

Cao said she ex­pected in­sur­ers to see ac­cel­er­ated pre­mium growth from tra­di­tional pro­tec­tion prod­ucts and health and re­tire­ment poli­cies, while sales of prod­ucts such as uni­ver­sal life in­surance would con­tinue to drop for the re­main­der of the year.

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