On 4th May 2018, the China Banking & Insurance Regulatory Commission (“CBIRC”) issued its ‘Notice of the Launch of Special Remedial Investigation Into Certain Life Insurance Products’ (“Notice”), thereby beginning its special investigation of life insurance products (“Policies”). The Notice, by way of annexure, listed a number of areas for inquiry, including Policy wording, Policy coverage, Policy rate-setting, Policy actuarial assumptions and Policy registration. In all, 52 types of Policies were included on a ‘negative’ list for investigation.
On 10th January 2019, CBIRC issued its ‘Circular of Identified Widespread Problems with Certain Life Insurance Products’ (“Circular”). The Circular published the results of CBIRC’s special investigation into life products, publicly ‘naming & shaming’ 24 CBIRC-regulated life insurance companies as ‘24 breachers’, and went on to identify a number of problems associated with these ‘24 breachers’, namely:
- Neither Policy coverage nor wording nor rate-setting nor actuarial assumptions were compliant;
- Policy coverage and features were deliberately and misleadingly over-stated during such Policy’s marketing & sale, and in the event of such Policy being no longer written, there is a complete lack of process and control in how to manage such run-off.
- Policy filing and registration was not compliant, with merely pro-forma and/or duplicate Policies being submitted for CBIRC registration, often in circumstances where such pro-forma Policies lacked any substantive insurance attributes.
Finally, the Circular made it clear that CBIRC will continue to monitor closely compliance of the entire Policy registration process of these '24 breachers', and that CBIRC will periodically publish further updates to this continuing investigative process.