Tighter scrutiny on bancassurance
Print Edition
China’s banking and insurance regulators are working together to clamp down on irregularities in the bancassurance business as they seek to protect policyholders’ interests after many instances of miss-selling were revealed.
The China Banking Regulatory Commission and the China Insurance Regulatory Commission yesterday jointly issued a guideline to banks and insurers demanding tighter requirement and risk disclosure.
They said insurers and banks should also accelerate the development of risk safeguards and long-term deposit-like insurance products.
To be effective from April 1, the new guideline requires that premium income from the products such as accidental injury insurance, health insurance, term life insurance, life insurance, pension insurance, property insurance and credit insurance with a period of over 10 years, should account for more than 20 percent of the total income from insurance sold by each bank.
Bancassurance, or insurance business done via bank channels, has drawn about 150 complaints during the first half of last year in Shanghai as investors were not fully informed of the risks in the insurance products‚ especially investment-linked policies. The investors were under the impression that the products were similar to bank savings or wealth management products as transactions were done at banking outlets.
About 90 percent of life insurance were sold via agencies including the banks, according to the CIRC.
Shanghai Fanxin Insurance Agency Co, the biggest insurance agency in the city, was fined by the CIRC for mis-selling an investment-linked insurance policy last year. The general manager of Fanxin at that time, Chen Yi, escaped abroad with 500 million yuan (US$82.5 million) raised from selling unauthorized insurance products. She was later caught in Fiji and sent back to China.
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