China tightens regulation over use of insurance funds

Source: Xinhua| 2018-01-27 19:03:27|Editor: Yurou
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BEIJING, Jan. 27 (Xinhua) -- China's insurance regulator said Friday newly revised rules will tighten regulation over the use of insurance funds and better serve the real economy.

The new rules, coming into force on April 1, will step up scrutiny over the overseas investment of insurance funds, said Jia Biao, deputy head of the insurance fund management regulatory department of the China Insurance Regulatory Commission (CIRC).

Overseas investment of insurance funds must follow the rules set by the CIRC, the central bank and the foreign exchange regulator, Jia said.

To prevent outbound investment becoming irrational, China has put a brake on projects in areas including real estate, hotels, cinemas, and entertainment, while investment in sectors such as gambling has been banned.

Shareholders of insurance firms will not be allowed to interfere in the operation of insurance funds, according to the new rules.

Firms commissioned to manage insurance funds should not reassign the funds, and measures to reduce leverage should be strengthened, the rules state.

"The implementation of the new rules will make better use of insurance funds to serve the real economy, cutting intermediate links and lowering costs," Jia said.

Authorities have moved to tighten regulation on the insurance sector as they put priority on preventing systemic financial risks.

China's insurance premium income posted a 19.2-percent year-on-year rise in the first 11 months of 2017 to reach 3.44 trillion yuan, CIRC data showed.

By the end of November, the industry had combined assets totaling 16.64 trillion yuan, up 10 percent from the beginning of 2017.