According to the news on January 29 on the website of the China Banking and Insurance Regulatory Commission, the life insurance Department of the China Banking and Insurance Regulatory Commission recently issued the notice on recent problems of life insurance products, which informed the typical problems found in the recent supervision of life insurance products, and required all companies to seriously rectify the problems and effectively improve the product management level.
For the main problems found in product verification, the circular points out that the first is product design. First, the definition of past symptoms is unreasonable. For example, the four medical insurances submitted by Xinhua life, Shanghai life, happy life and Bank of China Samsung stipulate that the symptoms that have not been diagnosed and treated by doctors before the effective date of the contract belong to 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 calculation of the eight products submitted by Huahui life, Xintai life, Soochow life, Guolian life, Hongkang life, Tian’an life and Taiping Life is unreasonable and there is a risk of long-term insurance and short-term insurance. The interest rate used for the calculation of cash value of the two life insurance submitted by love life is inconsistent. Third, increase the amount of life insurance products. For example, the increased interest rate of 11 increased lifetime life insurance submitted by Haibao life, Hetai life, Hengqin life, Huagui life, Xinmei mutual life and Xiaokang life is more than 3.5%, which is easy to be confused with the product pricing interest rate, and there is gimmick marketing risk.
The second is the expression of product terms. First, the terms are not rigorous. For example, in a disease insurance of PICC Life Insurance, the relevant statements about extremely severe malignant tumor in the terms are 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. The provisions on the application materials for death insurance benefits in the terms of a disease insurance of Yingda life are unreasonable, which is easy to cause claims disputes.
The third is the determination of product rate. First, the rate is unreasonable. For example, for the seven medical insurances submitted by CPIC life insurance, Ping An Life Insurance, Centennial life insurance, Tian’an life insurance and Taiping Life 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, the insurance liability of a disease insurance submitted by Minsheng life insurance is too single and lacks pricing basis.
There are also other issues. The product submission materials are not standardized, such as 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. The fee increase table is submitted as a separate material and is 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. For a certain endowment insurance submitted by Ping An Life, the assumed rate of return on investment in the actuarial report is filled in incorrectly.
The circular points out that individual companies have extensive product management and weak awareness of risk compliance. Some historical product terms contain relevant statements on 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 circular requires that all companies should continue to strengthen the audit and control of product development 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.
In the next step, the life insurance department will focus on accident insurance, internet life insurance and the use of new definitions of serious diseases for non major disease products, continuously monitor the product development and sales of various companies, resolutely crack down on the illegal development of insurance products, product speculation, misleading publicity and other behaviors, 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.
