Even as non-life premiums broke through the CNY1-trillion mark last year for the first time ever, the CIRC said that several problems still exist in the general insurance sector and asserted that this year, the "teeth" of regulatory officials will be "sharper".
Non-life premiums hit CNY1.05 trillion (US$166 billion) last year, representing a 13.8% increase over 2016.
Mr Chen Wenhui, CIRC Vice Chairman, speaking at a national conference this week on supervision of the P&C sector, said: “In 2018, we will take product supervision as a starting point to guard against risks. We will treat the disorder in the property insurance market as a top priority and impose the highest penalties on those organisations and personnel that have an adverse impact on the market and that are repeated violators.”
The CIRC explained that many of the problems in the non-life sector stem from products which deviate from the principles of insurance. The regulator pointed out that some insurance policies are designed as wealth management rather than protection products. Some products resemble gambling and contain elements of speculation in the underwriting. Other shortcomings include product pricing which is not based on actuarial calculations. In addition, there are many homogenous products in the market.
The other seven major issues in the non-life sector are:
- aggressive operations;
- disorderly market competition;
- false data;
- corporate governance failure;
- lack of awareness of the need for compliance;
- weak internal control; and
- a distorted incentive system.
This year, the tight supervision of the insurance industry will continue, and "double penalties" will be the norm for those found in violation of rules, said the CIRC. It added: “In 2018, the 'teeth' of regulators are bound to be more 'sharp' and violations of regulations and illegal acts committed by insurance organisations across the country will continue to be exposed."