The China Insurance Regulatory Commission (CIRC
) has announced that it will keep tabs on the proliferation of unregistered online companies providing insurance-style products in order to protect consumers.
The insurance watchdog recently met with representatives of several “mutual assistance platforms”, which are operated by internet startup firms that offer plans that resemble insurance policies through mobile apps, according to a statement released on the regulator’s website.
In the past two years, around 20 mutual assistance platforms were established in China, with some claiming to have over a million members. These members make financial contributions to create a money pool in exchange for coverage. Some plans cover only accidents, but others include illnesses as well. While these companies are not registered with the CIRC
, the regulator acknowledges them as a charitable movement that aims to protect members in their time of need.
However, the CIRC
has detected some risks in the emerging industry, as most providers have no actuary-based pricing systems and provision against risk. Due to the lack of supervision from a regulatory body, consumers have no guarantee of the solvency of these platforms. There are also privacy concerns regarding members’ personal information.
To avoid misleading members, the CIRC
said that these organizations must place emphasis on their charitable nature and let members know that “a donation is a one-way street, without any expected and guaranteed insurance coverage.”
There have been reports of platforms using misleading advertisements that promise large payouts with low contributions, and the CIRC
plans to inspect the premises of these firms.
In April, the CIRC
announced a roadmap to cut down on the risks present in the online insurance industry, and that it will clamp down on companies that hide behind the veil of charity while conducting their insurance operations.
Insurance regulator vice-chair out as China reshuffles government posts
China not likely to restructure its financial regulatory agencies
China’s crackdown on universal life products to impact unlisted insurers