Investors and companies have invested approximately $7bn in insurance technology. Credit: Darwin Laganzon from Pixabay.

China’s banking and insurance regulatory authority has reportedly ramped up its scrutiny of online insurance companies amid an ongoing crackdown on the tech industry.

Citing a notice, Bloomberg reported that the financial watchdog’s campaign is aimed at curbing ill marketing and pricing practices.

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The regulator has ordered the firms to ramp up user privacy protection and address such issues.

The firms which fail to comply with the latest mandate would face “severe punishment”, the report added.

The China Banking and Insurance Regulatory Commission did not comment on the move that could hinder the growth of an industry, which is expected to grow to $385bn in a decade.

“In recent years, online insurance has moved into a fast lane. At the same time, transgressions have been rampant,” quoted Bloomberg citing the notice.

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The notice, which called for “immediate rectification and regulation,” also cited certain offences such as illicit use of client information, mispricing risks, and illegal insurance operation.

Bloomberg analyst Steven Lam said: “China’s crackdown on marketing, pricing and fees for online insurance products should be good for industry leaders such as ZhongAn in the long term we believe. Better consumer protection supports more-sustainable industry development and competition on service quality and product innovation rather than via pricing and misleading ads.”

Citing a China Banking and Insurance Regulatory Commission’s official, the report added that over 140 insurance companies had started an online business in China by the end of 2020. Their total premium amounts to 6% of the industry total or $46bn.