The rules limit what products can be sold online, including accident cover, health insurance, term life insurance and more.
Companies must comply with the rules by the end of this year, or stop selling their insurance products online by January 1.
According to the CBIRC, several companies were involved in “inappropriate innovation” and “chaotic competition” to the detriment of consumer rights. The regulator has also noticed an increase in complaints filed by consumers against online insurance sellers, Bloomberg Report
The move is part of Beijing’s efforts to clean up the technology sector, which has had a huge impact on the financial system. This could hamper the growth of the industry, which is expected to reach RMB2.5 trillion (SG $ 530 billion) over a decade from now, according to China International Capital Corporation.
Waterdrop, a Beijing-based insuretech firm that was listed in the United States in May, said in its prospectus that it expects more regulations to introduce “additional restrictions” on its business. In March, the company closed its Waterdrop Mutual Aid business, a risky pool that provides financial support to sick members.
According to the CBIRC, insurers should choose “wisely” as partners with brokers to sell their products online. Under the new rules, companies must strictly monitor their marketing strategies.