China To Standardize Web Sales Of Insurance Intermediaries

The China Insurance Regulatory Commission (CIRC) has released a document to provide a framework for insurance intermediaries' online products selling and related risk control.

The document provides detailed regulations over insurance intermediaries' web sales thresholds, operating rules, information disclosure, and so on and will enter into effect on January 1, 2012.

In recent years, selling via web has risen to a major channel for Chinese insurers, with some agents and brokers continuing to widening the scope of their services.

But due to disappointing credit conditions and the growth of the Internet, the risks within the Internet insurance sale sector are also accumulating, requiring stricter supervision and legal regulations.

According to the document, Chinese insurance intermediaries must have complete management systems and reasonable operation standards before they conduct Internet insurance products selling.

At the same time, they are also required to have no less than 10 million yuan of registered capital and an area wider than the registered province, autonomous region, or municipality business area to engage in selling insurance products via internet.

Currently, insurers whose business scope is in the registered province are only required to have 2 million yuan of registered capital while the national insurance agent companies are asked to have a minimum of 10 million yuan (US$1.5 million) registered capital.

Besides this, the document specifies a series of requirements over the day-to-day service of insurance agents to guarantee the quality of web-sold insurance products.

"Upon the execution of the new regulations, many unqualified small insurance intermediaries will be excluded from the business, which, however, will strengthen the quality of the entire sector and fend off uncontrollable risks," said Tuo Guozhu, an insurance professor at the Capital University of Economics and Business.