China’s insurance regulator has introduced new rules designed to reduce the risks associated with property insurance products, according to an announcement on its website.
The new guidelines by the China Insurance Regulatory Commission (CIRC) state that insurers cannot issue policies to cover an investment risk that can make a profit as well as a loss, an event that leads to no real loss, or where the event insured against is certain to happen. Premiums must also be proportional with the calculation of the actual risk and insurance liability.
“There is a lack of historical data for many products, so the pricing process is unscientific,” a representative of the CIRC told Reuters
Last week, the CIRC said that it is looking at reducing the upper limit of a single shareholder’s stake in an insurer. From a maximum of 51%, the regulator plans to bring it down to 33.3% in order to prevent improper transfer of benefits.
These are the latest moves by the insurance authority in its bid to combat overbearing shareholders, funding term mismatches, overcharging of premiums, and risky acquisitions.
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