...Tightened Sales Rules Prompt Quality Improvement Chinese life insurers face more challenges in policy sales due to tightened sales rules introduced by the China Insurance Regulatory Commission (CIRC). More stringent regulations have prompted product mix improvements with greater emphasis on risk protection and profit margins, but a slowdown in premium growth. This trend is likely to continue in light of the latest two rules ¡ requiring 20% of bancassurance sales in either protection-type or long-duration products (began in April 2014), and the crackdown on "high cash value" products (usually negative margins). Slowdown in Premium Growth Reduces Pressure on Solvency Slowing premium growth reduces pressure on solvency margins, with a notable decline in the growth rate of regulatory required capital. However, most insurers' solvency margins are only slightly above the regulatory preferred benchmark of 150%, while profitability is generally moderate and vulnerable to unfavourable capital market...
