China is set to decentralise the supervision of its $3.1trn insurance industry as part of its efforts to boost efficiency.
According to a Caixin Global report, national regulator China Banking and Insurance Regulatory Commission (CBIRC) has issued new guidelines that will provide local regulators with more power to oversee parts of the insurance sector.
The move is expected to impact China’s 87 property insurers and 13 reinsurance companies.
Zhu Junsheng, an insurance industry expert at the Development Research Center of the State Council, told the publication that the decision will reduce costs and eliminate redundant administrative procedures. Additionally, it is also expected to encourage innovation.
Under the new guidelines, the local authorities will assume the regulatory responsibilities for 64 property insurers. CBIRC will retain the oversight for remaining 36 institutions, which include mainly larger entities with nationwide services.
The changes are also expected to optimise resource allocation and improve coordination between the top and local regulators.
Earlier, the Chinese authorities tested decentralisation of powers. However, the efforts remained suspended since 2018 following the merger of the banking and insurance regulatory bodies into the CBIRC.
Recently, CBIRC decided to take over four insurers and two trust firms for one year starting from 17 July due to poor governance.
The report noted that the companies concealed information about their shareholder structures and ultimate owners.