By: Engen Tham
SHANGHAI: China’s insurance regulator launched new rules on Tuesday to curb the risks associated with property insurance products, it said in a notice on its official website.
The move is the latest in a slew of measures introduced by the China Insurance Regulatory Commission (CIRC), which has been taking steps against overbearing shareholders, funding term mismatches and risky acquisitions, among others.
Insurers cannot issue products 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 will definitely occur, the guidelines said.
The premiums paid for a product must be determined in line with the calculation of the actual risk and insurance liability, the guidelines added.
“There is a lack of historical data for many products, so the pricing process is unscientific,” the regulator said in a question and answer with journalists.
The aim is to ensure reasonableness, so that insurers do not earn overly high premiums for insured risks, it added.
Last week, the regulator said it might slash the upper limit of a single shareholder’s stake in an insurance company to one-third, from 51 percent now, to prevent any improper transfer of benefits.
($1=6.4659 Chinese yuan) (Editing by Clarence Fernandez)
Source: Reuters