CIRC Releases Management Approach to Insurance Funds

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Aug. 11 – The China Insurance Regulatory Commission recently issued the management approach to insurance funds, effective August 31.

The notice, issued July 30, stipulates that insurance funds can only be used in the following forms, namely: bank deposits, purchases of bonds, stocks, securities investment funds, estate property investment, and other forms provided in the State Council’s regulation.

Furthermore, the notice emphasizes that insurance funds cannot be used in the following manner:

  • Depositing in non-bank financial institutions
  • Purchasing stocks which have been special marked by the Stock Exchange
  • Investing in equity and real estate property of the enterprises which cannot be expected to have a steady cash flow or value-added assets
  • Directly investing in real estate development and construction
  • Engaging in venture capital
  • Vouching for a person or loan, except for special provision
  • Other activities that the CIRC prohibits

Moreover, the management approach states that the use of insurance funds should comply with the ratio requirement. The total sum of insurance funds invested in bank deposits, government bonds, central bank bills and non-commercial banks cannot be less than five percent of the company’s total assets from the previous quarter.