News eDaily10 May 2017

China:CIRC vows to stop illegal use of insurance funds

10 May 2017

China's insurance regulator said yesterday that it will find and defuse hidden risks in the use of insurance funds, a fresh move to tighten supervision of the multi-trillion-yuan sector.

Authorities will stop the illegal use of insurance funds, keep the leverage ratio under control and fill regulatory gaps, reported the Xinhua News Agency citing a statement from the CIRC.

Inspections will focus on major investment in stocks, equities, real estate, alternative and financial products as well as overseas investment.

The sector will be screened for compliance risks, regulatory arbitrage, asset-liability mismatches and other major risks.

In the statement, the CIRC said insurance funds should serve the real economy and help supply-side structural reform.

Those who violate laws and regulations will receive the maximum punishment.

Chinese insurers grabbed headlines for using leveraged money to buy shares in listed companies, triggering sharp volatility in the market late last year.

By the end of last December, the combined assets of China's insurance sector totalled CNY15.12 trillion (US$2.2 trillion), official data show.

Yesterday's move came two days after the CIRC called for a strict and effective supervisory framework, pointing out that regulatory loopholes had given rise to risky practices.

 

 

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