Chinese insurers face tighter rules amid risky investments
The China Insurance Regulatory Commission (CIRC) has given insurers six months to comply with new rules concerning conflicts of interest following a crackdown on the use of leverage to play the Shanghai and Shenzhen stock markets. This follows a year which showed insurers building increasingly risky and illiquid portfolios under a lax regulatory regime. CIRC has effectively barred insurers from making risky investments. However, tightening the screw too fast could force insurers to sell and expose their balance sheets to a larger-than-expected credit risk. Shares of Chinese insurers are down 9% since December.
China’s insurance regulator has issued heightened compliance requirements for the sector which come into effect on July 1.