The Chinese government has stepped up its scrutiny of domestic insurance technology platforms, ordering companies to curb improper marketing and pricing practices and increase user privacy protection.
The China Banking and Insurance Regulatory Commission (CBIRC) on Wednesday rolled out an internet insurance revision plan, titled “Notice on Carrying out Special Rectification of Internet Insurance Disorders.” The plan aims to probe China’s online insurance companies to curb violations in their activities by October 2021. The legislation urges relevant firms to address issues such as improper marketing and pricing practices voluntarily, warning of “severe punishment” for those that don’t comply.
“In recent years, online insurance has moved into a fast lane. At the same time, transgressions have been rampant,” the notice states, citing such violations as illegal insurance operations on unauthorized platforms, mispricing and misuse of customer information.
Among other major issues that will come under inspection are misleading sales and failures to provide sufficient offline service.
Each online insurance firm is required to set up a workgroup that will identify and amend potential illicit practices by August 15. This gives firms an opportunity to inspect themselves and adjust practices to comply with Chinese law. However, regulators will pass inspections of their own where necessary.
According to CBIRC, over 140 insurance companies in China went online by the end of 2020, covering 298 billion yuan ($46 million) in premiums for the year, or 6% of China’s insurance industry total.
In a separate move late on Wednesday, Beijing unveiled a five-year plan outlining tighter regulation on China’s broader fintech sector. The so-called 10-point plan covers a wide array of spheres, including the digital economy, internet finance, artificial intelligence, big data and cloud computing, as well as monopolies and foreign investments.
This is the latest step in Beijing’s attempts to rein in China’s fintech sector, with numerous anti-monopoly investigations launched in recent months and various judicial actions taken against a wide range of e-businesses.
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