Insurance firms may face more regulation

There is still radical development seen in the insurance industry, said the China Banking and Insurance Regulatory Commission, after requesting further regulation of the life insurance market.

Some insurers rely on incentive policies to promote rapid business growth in the short term, while some companies have incomplete risk prevention and control systems, causing frequent market chaos, said CBIRC.

The watchdog pointed fingers at insurers, including Ping An Insurance (2318), China Life Insurance Company (2628), and China Pacific Insurance (2601).

Ping An Insurance had many complaints lodged against it across the country, suggesting a risk of sale misguidance, according to CBIRC.

Meanwhile, China Life Insurance Company, Ping An Insurance and China Pacific Insurance were involved in false fees and fictitious agency business, CBIRC said, adding that there were also insurance companies that have conducted false advertising and exaggerated product coverage.

The regulator emphasized that the regulatory authorities will continue to maintain close supervision, vowing to crack down on various irregularities in the market and penalize violations to protect the legitimate rights and interests of consumers.

The regulatory action is expected to cause short-term pressure on insurers operating in the mainland market, said Kenny Ng Lai-yin, a securities strategist at Everbright Sun Hung Kai, but it will help the market grow in the long term.