China's Insurance Industry (Photo : Getty Images)
The country's insurance industry has been warned against risks arising from several factors as China Insurance Regulatory Commission (CIRC) announced on Monday, April 10, that it will tighten regulations to avoid a systemic crisis, the Xinhua News Agency reported.
Chen Wenhui, vice chairman of CIRC made the warning in a statement issued on Tuesday, April 11, as he identified four major risks to China's insurance industry, which include solvency risks, liquidity pressures, poor corporate governance and external issues, in addition to uncertainties posed by the economy and global politics.
CIRC also urged the industry to give full attention to the insurance business while it called on regulators to strictly implement the law.
The commission also called on the insurance sector to support the structural reform being undertaken by government on the supply side and asked the industry to help promote real economic development.
The statement came following an announcement by the country's top anti-graft authority that Xiang Junbo, chairman and Party chief of the CIRC, was being investigated for a suspected serious violation of the Party's code of conduct.
Premier Li Keqiang recently said that China's financial sector has become vulnerable to risks, which include bond defaults, bad assets, shadow banking and Internet financing as well illegal and corrupt activities.
The premier said that order must be restored in the market and supported a crackdown on bank violations regarding the granting of credit, insider trading in the securities market and insurance fraud.
He also called on regulators to penalize internal supervisors and managers who conspire with some players to steal and sell information to other players in the market.
As regulations are challenged by rising debt and the emergence of new financial products, Chinese authorities have stressed the importance of addressing financial risks.
At an economic conference last December, regulators from the banking, securities and insurance sectors pledged to address financial risks as a priority.
In the first quarter of this year, CBRC has charged about 197 people for banking irregularities. Out of this number, 19 were disqualified for executive positions while 11 were barred from the banking business.