China insurance regulator to curb business of low-rated insurers: Reuters
China’s insurance regulator plans to restrict the business of insurers which have a low rating for asset liability management, Reuters reported Dec. 17 citing Xinhua news agency.
The move comes amid a sector-wide clampdown on risk and graft, which has led to new ownership rules for insurers and the fall of the country’s chief insurance regulator among other things, Reuters said.
Insurance firms will be rated from A to D by the regulator on their ability to ensure the matching of maturity, cash flow and cost on both sides of their balance sheet, said Xinhua, citing draft rules.
Those with poor ratings will be prohibited from certain investment activities.
Companies with the rating of D, the lowest, will be banned from launching new products within a certain period. Salaries of the top management of these firms will also be limited.
Insurers rated highly will be able to use their funds more freely and have greater freedom to launch new products.
The rules are currently in draft form and will come into effect next year.
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