CBIRC is consulting on draft interim rules on insurance asset management products in China. CBIRC has drafted the interim rules in accordance with the requirements of the guidance on regulating asset management business of financial institutions (guidance). The formulation of the interim rules is an important step to implement the requirements of the guidance and improve the regulation of asset management business in China. It will help regulate the development of insurance asset management products and broaden the scope and investment channels of long-term insurance funds. The deadline for comments is December 27, 2019. Additionally, CBIRC published a set of questions and answers (Q&A) related to the interim rules.
The interim rules consist of 67 articles in 8 chapters, covering general provisions, product-related parties, product offerings and distribution, investment and management, information disclosure and reporting, risk management, supervision, and supplementary provisions. The following are the key highlights of the rules:
- Insurance asset management products are classified as non-publicly placed products to qualified investors. The products include debt investment plans, equity investment plans, and portfolio insurance asset management products.
- To push forward the reform of streamlining administrative procedures, debt investment plans and equity investment plans can be offered following the registration process, while portfolio insurance asset management products can be offered after due filing.
- From the perspective of prudential supervision, the investment scope of insurance fund in asset management products shall comply with the regulatory requirements on insurance fund investment.
- The insurance asset management companies shall strengthen capacity building in investment management, enforce the accountability of responsible personnel, and improve the comprehensive risk management for products.
- Reinforcement of the responsibilities of product service agencies include specifying the qualification requirement and responsibilities of custodians, investment advisers and other service agencies and reinforcing accountability and supervision of relevant service agencies.
- Insurance asset management companies are required to set aside risk reserves in accordance with regulations and strengthen their identification and reporting obligations for related-party transactions.
- Insurance asset management companies shall effectively identify the actual investors and the ultimate source of funds invested in their products, in addition to fully disclosing information such as target areas, objects of investment, and transaction structures.
The interim rules are consistent with the guidance in terms of transitional arrangements. CBIRC will further revise and improve the interim rules based on the feedback received before issuance for implementation in due course.
Comment Due Date: December 27, 2019
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
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