Crackdowns may intensify after chief insurance regulator’s corruption probe

Crackdowns may intensify after chief insurance regulator’s corruption probe | Insurance Business

Crackdowns may intensify after chief insurance regulator’s corruption probe
As China’s main anti-graft body investigates the head of the China Insurance Regulatory Commission (CIRC) on corruption allegations, experts say that this could lead to increased regulatory scrutiny on the insurance industry.
 
On Sunday, CIRC chairman Xiang Junbo was subject to an investigation by the Central Commission for Discipline Inspection (CCDI) for “serious disciplinary violations”, a term commonly used in lieu of corruption.
 
According to analysts, the investigation could be linked to the risky practices of several insurance players in recent years, such as speculative investments in equities and real estate using short-term funds. These practices grew under Xiang’s watch, leading to the government cracking down.

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This could mean a shift in direction for the Chinese insurance industry, causing it to look more inward and moderate its expansion.
 
“China’s insurance industry has been developing too fast and aggressively since Xiang took office,” an anonymous executive at a major insurer told Reuters.
 
“Going forward, the CIRC would probably tighten regulations on the industry, in particular on insurers’ solvency and their universal life products,” the executive added. “The whole industry is likely to become more traditional and conservative than before.”
 
Xiang, who took the helm of the CIRC in 2011, oversaw rapid growth of the industry, helped by liberalisation of investment regulations which gave the insurers permission to invest more aggressively both at home and abroad.

CIRC data shows that the country’s insurance assets have almost doubled over the last three years, totalling RMB15.1 trillion yuan (US$2.19 trillion) by end-2016.


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