Apr 2020

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Regulator to create new exclusive intermediary category

Source: Asia Insurance Review | Aug 2019

The regulatory authorities are planning to reform the insurance agency system by introducing a new category of intermediaries – the exclusive independent insurance agent.
The move is aimed at overcoming the shortcomings of the traditional pyramid arrangement of the current agency channel which is regarded as controversial. 
The Shanghai Securities News reported that the basic characteristics of the system of exclusive independent insurance agents will be: 
  • An agent can operate on his own, under the daily supervision and management of the insurance company. 
  • Insurance sales are effected with the authorisation of the insurance company. 
  • There are no group formations nor multi-level teams. 
  • The agent may open a shop in the community, in the business district and other places. 
  • The independent agent may be registered as a proprietor or as an enterprise.
Criteria for insurers
Not every insurance company automatically qualifies for this model. According to the draft guideline, the insurance company should have met the following conditions: 
  • Has been profitable for the last two consecutive years.
  • The comprehensive solvency adequacy ratio and core solvency adequacy ratio of the previous year are greater than 200%.
  • The comprehensive risk rating of the insurance company is not lower than Grade B in the most recent two consecutive quarters.
The company’s corporate governance structure must be good, internal control is sound, and operations are sound:
  • A special feasibility study has been carried out.
  • The insurer has in place an intermediary channel management department and responsible personnel.
  • There has been no record of major administrative penalties in the past two years, and no suspected major violation being investigated by the CBIRC.
Pilot insurers
At present, only Huatai Property Insurance and Sunshine Property Insurance have been approved to pilot the exclusive independent insurance agent model. 
Criteria for agents
The exclusive independent insurance agent selected by the insurance company shall meet the following requirements:
  • the candidate has at least a college degree or above; 
  • if the candidate has been working in the insurance sector for more than five years, the educational qualification may be relaxed to at least a high school diploma; 
  • the candidate has some insurance industry experience, or has potential insurance sales skills after having received insurance training from the insurer; 
  • the candidate has been no record of major administrative penalties in the past three years; 
  • social credit record is good; and
  • the candidate has no record of serious cases of bad faith in the past five years.
These news stories are taken from Asia Insurance Review’s unique eWeekly China newsletter. 
eWeekly China focuses on the world’s fourth largest insurance market – in English – providing the most up-to-date news to give readers insights and overviews of the Chinese market. 
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