In the first revamp of regulations covering insurance agency business after five years, the China Banking and Insurance Regulatory Commission has drafted new regulations for insurance agencies and agents that would affect eight million people in the trade.
The draft rules cover both insurance agencies and individual insurance agents, and deal with market access and exit; including qualifications, practitioners, operating rules, self regulation, as well as supervision and inspection.
An insurance agency or agent refers to the institution or individual who handles business on behalf of an insurance company within the scope authorised by the company and charges commissions.
In order to distinguish it from insurance companies, the draft proposes that an insurance agency include the words “insurance agency” in its name.
Also, the business scope of the insurance agency is to be limited to four areas:
- selling insurance products,
- collecting insurance premiums,
- carrying out loss investigations, and
- dealing with claims for insurance companies.
Individual insurance agents and employees of insurance agencies must undergo training before they join the field as well as undergo continuing training after they are hired. The training has to cover industry knowledge, legal knowledge and professional ethics.
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Although the regulators have previously stipulated that agents or employees of insurance agencies need not sit for qualifying examiniations, the draft rules require that they be registered with only one institution so as to be practitioners. They have to be registered with only one institution at any one time.
The draft rules propose to bar four types of entities or people from the sector, namely:
- those found guilty and penalised for corruption, bribery, misappropriation of property, destruction of the socialist market economic order in the previous five years;
- those who are prohibited by any financial regulatory agency from operating in the financial services sector for a specified period of time that has yet to expire;
- those punished for breach of trust by the relevant state authorities and who would have been similarly punished in the insurance arena, or who have a record of committing serious breach of trust within the previous five years; and
- anyone barred from the sector under circumstances stipulated by the law or administrative regulations or insurance supervisory units.
This first appeared on Asia Insurance Review's eWeekly China. If you are keen to tap one of the world's leading insurance markets, subscribe here.