China’s banking and insurance watchdog is stepping up scrutiny of the nation’s insurance technology platforms, widening a regulatory dragnet that has roiled global investors.
The regulator ordered companies and local agencies to curb improper marketing and pricing practices, and step up user privacy protection, according to a notice seen by Bloomberg News. It encouraged companies to address these issues voluntarily and said those that failed to comply would face “severe punishment.”
The sweeping order goes beyond the targeted action that’s hit a few listed companies including Waterdrop Inc. and operations backed by Ping An Insurance Group Co. in the months since China began a broad crackdown on its fintech sector this year. It has since moved to rein in some of its biggest technology companies, as well as edtech, ride-hailing and short video platforms.
The online insurance industry had been expected to grow to 2.5 trillion yuan ($385 billion) in a decade. The China Banking and Insurance Regulatory Commission didn’t immediately respond to a request seeking comment.
Just a year ago, the insurance industry seemed ripe for disruption as startups vowed to transform traditional practices with technology. Regulators have since moved to shutter operations including crowd-sourcing healthcare platforms operated by Waterdrop and Ant Group Co.
Investors and companies have poured an estimated 45 billion yuan into insurance technology, according to estimates from online consultant iResearch.
By the end of 2020, more than 140 insurance companies in China had started online insurance businesses, with total premiums of 298 billion yuan for the year, or 6% of the industry total, a CBIRC official said in a speech in May.
Photograph: Traffic travel along a road in Beijing, China, on Thursday, April 23, 2020. China’s economy will grow by less than 2% in 2020 as the anti-virus shutdowns combine with a collapse in global demand due to the pandemic, according to the latest Bloomberg survey of economists. Photo credit: Giulia Marchi/Bloomberg.
Related:
- Investors Wary in Short-Term of China’s Unpredictable Regulation
- Global Regulators Warned About Entry of ‘Big Tech’ Firms into Financial Services
Topics China
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