SHANGHAI (Reuters) - China’s insurance regulator has suspended Foresea Life from selling “universal life” products until it addresses problems in managing customer accounts and information, amid a wider crackdown on risky activity by some players in the sector.
Foresea Life, a unit of financial conglomerate Baoneng Group, has been aggressively wresting market share from bigger, listed peers by offering investors guaranteed-return, higher yielding products.
It has built up stakes in a number of firms and played a key role in the takeover battle for China Vanke, funding a quarter of Baoneng’s 25 percent shareholding in the leading property developer.
The China Insurance Regulatory Commission (CIRC) said on its website late on Monday that it had found problems during an inspection of the firm in May and had asked the company to fix them.
It said it had decided to suspend Foresea Life with immediate effect after receiving a report from the company on Dec. 1 which showed that the firm had failed to make adequate changes.
“Your firm should conscientiously improve customer service, strengthen risk monitoring and response to maintain company stability,” the CIRC said in the statement addressed to the firm.
A Foresea Life executive declined to comment.
The insurance regulator also said it has suspended the online sales channel for universal life insurance products by six insurance companies, including Foresea Life and China Evergrande Group’s life insurance unit, due to problems such as misleading marketing and malignant competition.
The CIRC conducted a targeted investigation into nine insurance companies from May to August, looking into their universal life insurance products and requiring some companies to fix their problematic activity, it said in the statement.
“Universal life” products refer to life insurance policies combining death benefits and an investment element, and account for 90 percent of Foresea’s premium income.
The company had suspended new business at its “universal life” unit and had set up a team to respond to the regulator’s requests, the Securities Times newspaper reported.
The insurance unit has recently increased its stakes in a number of Chinese companies including leading appliances maker Gree Electric Appliances and medicine firm Dong-E-E-Jiao
China’s top securities regulator on Monday condemned “barbaric” share acquisitions by some asset managers, leading to a fall in shares of Gree Electric and China Vanke.
Reporting by Brenda Goh; Additional Reporting by SHANGHAI Newsroom and Shu Zhang in BEIJING; Editing by Stephen Coates and Sunil Nair