According to the CBRC website on the 29th, the life insurance Department of the CBRC recently issued a notice on the recent problems of life insurance products. Many insurance companies including Xinhua life, Shanghai life, happy life and Bank of China Samsung were named.
The circular mentioned that the main problems found in product verification include product design, product clause expression, product rate determination and other problems.
Specifically, on the issue of product design, first, the definition of past symptoms is unreasonable. For example, Xinhua life insurance, Shanghai life insurance, happy life insurance and Bank of China Samsung submit four medical insurances. The terms stipulate that the symptoms that have not been diagnosed and treated by doctors before the effective date of the contract are past symptoms, lack of objective judgment basis, and are easy to lead to claims disputes.
Second, the calculation of cash value. For example, the cash value of the eight products submitted by Huahui life, Xintai life, Soochow life, Guolian life, Hongkang life, Tian’an life and Taiping Life is unreasonable, resulting in long-term risk and short-term risk. The interest rates used in the calculation of cash value of the two life insurance submitted by love life are inconsistent.
Third, increase the amount of life insurance products. For example, Haibao life insurance, Hetai life insurance, Hengqin life insurance, Huagui life insurance, Xinmei mutual life insurance and Xiaokang life insurance submitted 11 increased life insurance with an increased interest rate of more than 3.5%, which is easy to be confused with the product pricing interest rate, and there is a risk of gimmick marketing.
On the expression of product terms, first, the expression of terms is not rigorous. For example, PICC Life Insurance has a disease insurance, and the relevant expression of extremely severe malignant tumor in the clause is inconsistent with the industry’s code for the use of disease definition of major disease insurance (revised version 2020).
Second, the terms are unreasonable. For example, for a short-term medical insurance submitted by HengAn standard , the statement on renewal in the terms does not comply with the regulatory provisions, and there is a serious hidden danger of misleading. Yingda life insurance a disease insurance, the provisions on the application materials for death insurance benefits in the terms are unreasonable, which is easy to cause claims disputes.
On the issue of product rate determination, first, the rate determination is unreasonable. For example, CPIC life insurance, Ping An Life Insurance, Centennial life insurance, Tian’an life insurance and Taiping Life Insurance submitted 7 medical insurance, the age range of rate determination is too large, and there is a risk of unfair pricing.
Second, the rate determination lacks a pricing basis. For example, Minsheng life insurance submitted a disease insurance with too single insurance liability and lack of pricing basis.
On other issues, the product submission materials are not standardized. For example, the three types of health insurance submitted by Shanghai Lujiazui Finance & Trade Zone Development Co.Ltd(600663) Cathay Pacific and The Pacific Securities Co.Ltd(601099) health are submitted as separate materials and are not included in the rate table. The two medical insurances submitted by Ping An Health have problems such as incomplete filing materials, upload errors and so on. The assumed return on investment in the actuarial report of a two guarantee insurance submitted by Ping An Life is incorrectly filled in.
The CBRC pointed out that the product management of individual companies is extensive and the awareness of risk compliance is indifferent. Some historical product terms have relevant statements about the interest bearing account of maturity accumulation. The problems involved in liability management and interest rate determination have serious potential risks, which is easy to cause the expectation of “rigid cashing”.
The cbcirc requires that all companies should continue to strengthen the audit and control of product development and reporting. The chief actuary should implement the first responsibility of product audit and control, and timely find the problems and deficiencies in product design, pricing, actuarial and other aspects. All companies shall conduct self-examination in strict accordance with the contents of previous circulars and the problems in the “negative list”. For the problems found in the product verification of other companies, they shall take warning, change and stop selling similar products in time. If adverse effects have been caused, they shall report in time and make serious rectification, and there shall be no fluke.
Next, the life insurance Department of the China Banking and Insurance Regulatory Commission will continue to monitor the product development and sales of various companies in terms of accidental injury insurance, internet life insurance and the use of new definitions of serious diseases for non major disease products, resolutely crack down on the illegal development of insurance products, product speculation and misleading publicity, and deal with the problems found in violation of laws and regulations, The company will be subject to regulatory measures or administrative penalties according to law, and the responsibilities of relevant personnel will be seriously investigated.
