The insurance regulator of China has called on insurers to step up their efforts to supervise their operations and investments, as well as righting market disorder.
In a risk notice published on its website on Thursday, the China Insurance Regulatory Commission (CIRC
) warned insurance companies to close loopholes in their operations. This is the latest in a string of directives issued by various Chinese financial regulators in recent weeks, as the industry as a whole moves to tackle risks that emerged during its rapid and aggressive growth period.
Want the latest insurance industry news first? Sign up for our completely free newsletter service now
The notice instructed insurers to put in place stringent control mechanisms to prevent illegal activities and uncover the misuse of funds, falsified shareholder investment, and corporate governance failures.
Over the past few years, several insurance players have bought significant stakes in publicly traded firms, usually funded by short-term insurance funds sourced from high-yield “universal life” insurance policies and other investment products. This exposed the industry to significant risk, leading to a government crackdown and culminating in the removal of former CIRC
chairman Xiang Junbo from his post.
China’s chief regulator axed over corruption case
China’s insurance sector to face more risks, warns senior official
Crackdowns may intensify after chief insurance regulator’s corruption probe