China:Regulator to introduce classification system for insurance agencies and brokers

The CBIRC is preparing a classification system for insurance intermediaries, that is expected to be introduced in 2020.

The classification system will grade insurance intermediaries according to one of four categories: A,B,C or D, with A being the best and D the worst grade. The CBIRC will finetune its supervision of insurance intermediaries in line with their rating, reported Beijing Business Today.

The criteria to be used in classification include corporate governance, compliance management, business quality, operating scale, number of years in operation, registered capital, frequency in changes of shareholders and disciplinary action imposed, if any. Intermediary channels are important because they contribute over 80% of the insurance industry's premiums.

Under the proposed system, some intermediaries will not be eligible to carry out online Internet insurance business. For example, insurance intermediaries with an 'A' rating will be allowed to work with third-party distribution platforms; those with a rating of 'B' will be allowed to operate only their own Internet platform business; those with a rating of 'C' or 'D' will be barred from online insurance business.

Statistics show that at the end of 2018, there were 2,647 insurance professional intermediaries in the Chinese market, including five insurance intermediary groups, 240 national-level insurance agencies, 1,550 regional-level insurance agencies, and 499 insurance brokerage companies. In addition, there are 32,000 indirect insurance agencies (ie, these are entities that operate a principal business and sell related insurance on the side, like tour companies which distribute travel insurance).

Source: Asia Insurance Review