Internet property insurance welcomes new regulations with clear entry threshold
2024-08-18
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Recently, the State Financial Supervision and Administration Bureau issued the "Notice on Strengthening and Improving the Supervision of Internet Property Insurance Business" (hereinafter referred to as the Notice), which clarified the business scope, business operating conditions, range of insurance types that can expand the operating area, and business supervision requirements of Internet property insurance.
Industry insiders said that the notice aims to further standardize business activities in this field, effectively prevent industry risks, effectively protect the legitimate rights and interests of financial consumers, promote the digital and intelligent transformation of the property and casualty insurance industry, and achieve high-quality development.
Clarify operating conditions
In recent years, the Internet property insurance business has developed rapidly, providing diversified protection services for people's consumption and travel, and playing a positive role in serving the real economy, serving new citizens and other social governance fields. At the same time, some problems have also been exposed. As a supporting normative document for the "Internet Insurance Business Supervision Measures", the Notice further clarifies the business operating conditions of Internet property insurance.
The notice clearly states that property insurance companies other than internet insurance companies must meet the following conditions to carry out internet property insurance business: the comprehensive solvency ratio is not less than 120% and the core solvency ratio is not less than 75% for the last four consecutive quarters; the comprehensive risk rating is B or above for the last four consecutive quarters; and other conditions stipulated by the State Administration of Financial Supervision.
Internet insurance companies that carry out Internet property insurance business must comply with the relevant conditions of the "Internet Insurance Business Supervision Measures", and their solvency and comprehensive risk ratings at the end of the previous quarter must meet the indicators required by the preceding paragraph.
Industry insiders said that compared with the "Notice on Strengthening and Improving the Supervision of Internet Property Insurance Business (Draft for Comments)" issued by the former China Banking and Insurance Regulatory Commission in 2021, the entry threshold of the notice has been lowered.
In the latest quarterly solvency disclosure of insurance companies, the comprehensive risk rating of seven companies, namely Fude Property & Casualty Insurance, Anhua Agricultural Insurance, Dubang Property & Casualty Insurance, Everest Property & Casualty Insurance, Qianhai United, Bohai Property & Casualty Insurance, and Huaan Property & Casualty Insurance, was C, and that of Anxin Property & Casualty Insurance was D. This also means that these eight companies will be "shut out" by the new regulations.
Fu Jian, director of Henan Zejin Law Firm, believes that the rapid development of Internet property insurance business has provided consumers with more convenient and efficient services, but there are also some risks and problems, such as the design of products is not standardized and the compliance management of insurance companies is insufficient. Therefore, it is very necessary to strengthen and improve the supervision of Internet property insurance business. The issuance of the notice reflects the regulatory authorities' attention to the development of Internet insurance business and their intention to regulate it.
Determine product scope
The notice proposes to support property insurance companies to develop small-scale, decentralized, convenient and affordable property insurance products based on specific Internet scenarios, so as to improve the convenience and availability of insurance services.
Yuan Shuai, deputy secretary-general of the Zhongguancun Internet of Things Industry Alliance, believes that inclusive insurance is an important means to protect social livelihood and promote social fairness and justice. Supporting property insurance companies to develop small-scale, decentralized, convenient and inclusive property insurance products will help expand insurance coverage and allow more people to enjoy insurance protection.
Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, told China Business News that small-scale, decentralized, convenient and inclusive property insurance products can lower the threshold for consumers to purchase and improve the availability and convenience of insurance services, which is of great significance for improving consumer satisfaction and enhancing the market competitiveness of the insurance industry. At the same time, insurance products developed based on specific scenarios on the Internet can better serve the real economy and the people, and provide strong protection and support for economic and social development.
Regarding the expansion of business operating areas, the notice clearly states that, in principle, qualified property insurance companies can expand the operating areas of Internet property insurance business to provinces (autonomous regions, municipalities directly under the central government, and cities with independent planning status) where no branches have been established, and promptly report the expansion of Internet property insurance business to the dispatched agencies in the expansion areas.
However, property insurance companies that operate agricultural insurance, ship insurance, special risk insurance and other types of insurance are, in principle, not allowed to expand their operating areas through the Internet.
The notice clearly states that property insurance companies will be strictly controlled from expanding their motor vehicle insurance business areas to provinces (autonomous regions, municipalities directly under the central government, and cities with independent planning status) without branches through the Internet. If they have strong risk management, internal control management and comprehensive service capabilities, match the market environment, market capacity, business demand, degree of competition, etc. of the corresponding regions, and meet the regulatory requirements of the corresponding regions, they can be implemented after careful evaluation by the Financial Regulatory Administration.
Data shows that motor vehicle insurance accounts for the highest proportion of original insurance premium income among all businesses of property and casualty insurance companies. In the first half of this year, the original insurance premium income of property and casualty insurance companies was 917.6 billion yuan, of which motor vehicle insurance accounted for 431.1 billion yuan, accounting for nearly half.
Wang Peng believes that measures such as supporting product innovation, improving service convenience, and regulating market order will help promote the healthy and stable development of the insurance industry and better serve the real economy and the people. At the same time, this also reflects the regulatory authorities' high attention to financial risk prevention and consumer rights protection.
Adhere to the bottom line of risk
The notice adheres to the principle of supervision for the people, focuses on strengthening supervision in areas such as business behavior norms and on-site services, enhances the transparency of Internet property insurance business and the availability of insurance services, and further strengthens the protection of financial consumers.
The notice clearly states that property insurance companies are strictly prohibited from expanding their operating areas through the Internet for offline businesses in order to evade local supervision.
"Local supervision is an important means to ensure the healthy and orderly development of the insurance market." Yuan Shuai believes that strictly prohibiting property insurance companies from expanding their offline business operations through the Internet can effectively prevent insurance companies from evading local supervision and ensure the implementation of regulatory policies. Internet property insurance business has cross-regional and cross-industry characteristics and is prone to systemic risks. By strengthening local supervision, potential risk points can be discovered and dealt with in a timely manner to maintain the stability and security of the financial market. At the same time, strengthening supervision can also promote insurance companies to improve service quality and efficiency, and enhance consumer satisfaction and trust.
In addition, the notice also made it clear that insurance institutions should establish a full-process service system including insurance contract modification, policy cancellation, claims settlement and complaint handling, and effectively protect the legal rights of financial consumers such as the right to know, the right to choose independently and the right to fair trade, and collect, process and use personal information in accordance with the principles of legality, legitimacy and necessity.
In terms of on-site services, the notice clearly states that the legal entity of a property insurance company bears the ultimate responsibility for on-site services and the primary responsibility for handling complaints and opinions from financial consumers.
Angel investor and Internet expert Guo Tao believes that the policy is not only a comprehensive regulation of Internet property insurance business, but also an important measure to promote high-quality development of the industry, protect consumer rights and interests, and promote inclusive finance. Insurance companies need to actively adjust their strategies, grasp policy guidance, achieve compliance and innovation in parallel, respond to market changes in a more flexible manner, and maintain core competitiveness.
The head of the relevant department of the State Financial Supervision and Administration Bureau stated that the notice will be implemented from the date of issuance, and insurance institutions that newly carry out Internet property insurance business must comply with all conditions and regulations of the notice. Property insurance companies that have already carried out Internet property insurance business will be given a transition period. Property insurance companies should promote rectification on the basis of effectively protecting the legitimate rights and interests of financial consumers, and fully comply with all requirements of the notice before December 31, 2024.
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