| AI Finance News Agency
Editing by | Lu Jia
Recently, the CIRC issued the Measures for the Administration of Market Access for Branches of Insurance Companies (hereinafter referred to as the "Measures"), which regulate the process of setting up, remodeling, changing business premises and withdrawing branches of insurance companies, and delineate the regulatory red line.
The scheme has been implemented since the date of publication. The industry is concerned about which insurers will be affected by the scheme and are restricted from opening new branches.
Significant administrative penalties are one of the factors affecting the establishment of new institutions. According to AI Financial News, the regulatory system has issued penalties for four large insurance companies, Chinese Insurance, Chinese Life, Xinhua Insurance and Ping An of China, to stop new business, remove them from their posts or issue large fines. Moreover, Chinese Life and Ping An both have had a big impact on public opinion this year. According to the provisions of the new measures, the above-mentioned branches of the enterprise construction or have a certain impact.
In addition, in the access conditions, solvency indicators, comprehensive risk rating and corporate governance assessment results become a comprehensive basis for the establishment of new institutions, Pearl River Life, Fude Life, peace of mind financial insurance and other small and medium-sized insurance companies due to incomplete compliance with the requirements, business development or therefore limited.
Industry insiders said that the opening of branches is an important way for insurance companies to expand the market and do a large business volume, and with stricter supervision, clear branch process, will help the healthy development of the insurance industry.
If 300,000 people are fined, the establishment of peer branches is prohibited
It is reported that compared with the previous version, the regulator also applied for branch restrictions in addition to the increase and supplement. The new restrictions on branch market access are: in the past year, they have been fined more than 300,000 yuan, restricted business scope, stopped new business, removed from their posts, revoked business licenses, etc., and may not set up branches of the same level.
Regulatory penalty information shows that this year, Pearl River Life, Chinese Life, Ping An Life were fined more than 300,000 yuan.
Insurance companies that are subject to the penalty of stopping new business shall not set up new branches. According to AI Finance News Agency statistics, in terms of stopping new business, the Liuzhou Regulatory Bureau of the CBRC ordered the Chinese Baoliuzhou City Branch to stop accepting new commercial vehicle insurance business for 3 months in Liuzhou City administrative division, Internet sales channels and mutual agent sales channels (July 31, 2021 - October 31, 2021). This also means that Chinese will be limited to open local and municipal branches in the coming year.
In September, the official website of Agricultural Bank of China announced that the company had received a decision on administrative penalties issued by the Hunan Banking Regulatory Bureau, and that the Hunan branch of Agricultural Bank Life had been ordered to stop accepting new business for one year due to the failure to use approved or recorded insurance rates in accordance with the provisions.
In addition, the 105-group branch company of the five branches of the China United Canals Branch (hereinafter referred to as the "China United Branch Company") was fined 500,000 yuan by the supervision of the company for the existence of facts related to the preparation of false documents and information, false underwriting of agricultural insurance, false claims, etc., and ordered to stop accepting new agricultural insurance business for one year. In this punishment, the regulator not only imposed a new penalty on the United Branch of China, but also revoked the relevant person in charge of the post. In fact, this year, some insurance company officials have also received the lifting of penalties. It is reported that the New China Life Chat City Branch and the People's Life Insurance Chat City Branch are not in place due to internal control, the relevant managers were removed from their posts.
Individual penalties for agents are also being increased. In July this year, Taikang Life Shanxi Branch agent Cao a violation of the exhibition industry, was banned from the insurance industry for life.
It is worth noting that there must be no major negative public opinion events when preparing for the establishment of branches other than provincial branches. This year, Chinese Life and Ping An of China have one after another outbreak of employee complaints, the impact of a wide range.
Under the new approach, companies such as China United, Taikang Life, Chinese Life and Ping An will all be restricted in opening branches.
Branch market access threshold raised
In addition to the restrictions that may not be opened, the regulatory requirements for opening also provide for the conditions under which they may be opened.
The comprehensive solvency adequacy ratio, core solvency adequacy ratio, risk comprehensive rating and corporate governance assessment results form the basis of the branch access threshold.
Among them, the comprehensive solvency adequacy ratio needs to meet 150% (provincial branch) and 120% (non-provincial branch), the core comprehensive solvency adequacy ratio needs to reach 75%, the comprehensive risk rating for two consecutive quarters in Category B, the previous year's corporate governance assessment results are above category C.
AI Finance News read the second quarter solvency information found that Fort Life Life, Peace of Mind Financial Insurance, Evergrande Life, United Life and other insurance companies are not fully in line with this regulatory red line, the future opening of branches or limited.
In addition, according to the 2020 personal insurance company corporate governance assessment results disclosed by the CIRC, 27 of the 86 life insurance companies are B-grade (better), 36 are C-grade (qualified), a total of 23 companies have a score below C-level, accounting for 27%. It also means that 59 insurers will be restricted by the results of regulatory ratings.