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 has ordered companies and local agencies to curb improper marketing and pricing practices, and step up user privacy protection, according to a notice.
It encouraged companies to address these issues voluntarily and said those that failed to comply would face “severe punishment.”
Photo: Reuters
The sweeping order goes beyond the targeted action that has hit a few listed online platforms including Waterdrop Inc (水滴籌) and operations backed by Ping An Insurance Group Co (平安保險) in the months since China began a broad crackdown on its financial technology sector this year. It has also moved to rein in some of its biggest technology companies, as well as education technology, ride-hailing and short video platforms.
The latest move would stymie growth in an industry that had been expected to grow to 2.5 trillion yuan (US$386 billion) in a decade.
The China Banking and Insurance Regulatory Commission did not immediately respond to a request seeking comment.
“In recent years, online insurance has moved into a fast lane. At the same time, transgressions have been rampant,” according to the notice, which cited offenses including some Internet platforms illegally operating in insurance, mispricing risks or illicitly using client information. It called for “immediate rectification and regulation.”
Shares of US-listed insurance platform Huize Holding Ltd (慧擇保險) fell 5 percent, the most in two weeks, after the notice was reported. Insurance agency and platform Fanhua Inc (泛華金融) dropped nearly 6 percent. Ride-hailing service Didi Global Inc (滴滴), which operates a fledgling financial services business, declined 3.7 percent. Shares of ZhongAn Online P&C Insurance Co (眾安保險) slid 8.7 percent at 9:38am in Hong Kong.
Just a year ago, insurance seemed ripe for disruption as start-ups vowed to transform traditional practices with technology. Regulators have since moved to shutter some operations, including mutual aid healthcare platforms operated by Waterdrop and Ant Group Co (螞蟻集團). A draft circular in January might potentially bar companies from selling certain insurance products if enacted.
The overhang presents multiple challenges for Waterdrop, which was one of a few Chinese fintechs to have pulled off an initial public offering this year. The company has warned it “may not be able to achieve or maintain profitability or positive cash flow in the future” after incurring net losses and negative cash flow each year since its inception in 2016. It lost US$101 million last year after generating operating revenue of US$464 million.
Investors and companies have poured an estimated 45 billion yuan into insurance technology, according to estimates from online consultant iResearch.
By the end of last year, more than 140 insurance companies in China had started online insurance businesses, with total premiums of 298 billion yuan for the year, or 6 percent of the industry total, a commission official said in a speech in May.
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
Six years ago, LVMH’s billionaire CEO Bernard Arnault and US President Donald Trump cut the blue ribbon on a factory in rural Texas that would make designer handbags for Louis Vuitton, one of the world’s best-known luxury brands. However, since the high-profile opening, the factory has faced a host of problems limiting production, 11 former Louis Vuitton employees said. The site has consistently ranked among the worst-performing for Louis Vuitton globally, “significantly” underperforming other facilities, said three former Louis Vuitton workers and a senior industry source, who cited internal rankings shared with staff. The plant’s problems — which have not
TARIFF CONCERNS: The chipmaker cited global uncertainty from US tariffs and a weakening economic outlook, but said its Singapore expansion remains on track Vanguard International Semiconductor Corp (世界先進), a foundry service provider specializing in producing power management and display driver chips, yesterday withdrew its full-year revenue projection of moderate growth for this year, as escalating US tariff tensions raised uncertainty and concern about a potential economic recession. The Hsinchu-based chipmaker in February said revenues this year would grow mildly from last year based on improving supply chain inventory levels and market demand. At the time, it also anticipated gradual quarter revenue growth. However, the US’ sweeping tariff policy has upended the industry’s supply chains and weakened economic prospects for the world economy, it said. “Now
RSS