Anbang Banned for Three Months

Reuters: China's insurance regulator bans Anbang Life for three months
China's Anbang Life Insurance Co was punished by the country's insurance regulator which on Friday barred the firm from applying to issue new products for three months, the latest move in an industry-wide crackdown.

Anbang Life, a key part of Anbang Insurance Group Co [ANBANG.UL], was cited for "disrupting market order" by designing a product that bypassed regulations aimed at curbing growth of short-term, risky universal life insurance products, the China Insurance Regulatory Commission (CIRC) said in an online public notice.

CIRC's move against Anbang Life comes during a widespread regulatory crackdown on what is seen as the excessive use of universal life products by some insurers, and as China's central leadership moves to curb risk in the financial system.
Basically, Anbang and other insurers are engaged in maturity mismatch:
Anbang Life intentionally designed a long-term annuity insurance product as a two-year product, circumventing rules, CIRC said in Friday's notice.
iFeng: 安邦人寿遭处罚!3个月禁止申报新产品 处罚有多重
The so-called "long insurance short to do", in recent years, some of the insurance companies to quickly obtain the scale of insurance practice. Simply put, that is, the protection of a long period of time (more than a decade) of insurance products, through the rapid return of premiums, given the consumer to determine the benefits, making the vast majority of consumers purchase products in the policy guarantee period is not yet reached Go to surrender. Thus, long-term short-term insurance products, the actual survival period will not reach the protection period so long, often less than five years, many in less than three years.

And with the traditional sense of the insurance surrender is different from the surrender of this product for consumers, there will be no loss, but there will be gains. And for insurance companies, the consumer's surrender is often expected, because to a certain extent, the consumer's surrender is exactly what the insurance company's product design dictates.

Objectively speaking, these products have both security and financial investment functions, with stable income, high transparency, misleading sales and other characteristics, but the individual companies in the development of short-term product is more radical, the product shorter and shorter, "Short money long cast" situation, there are "asset-liability mismatch" and "cash flow" two potential risks. Therefore, the CIRC issued in March 2016 "China Insurance Regulatory Commission on the specification of short-term life insurance products related to the notice" (Bao Jian Fa [2016] No. 22), to guide the industry to adjust the business structure, the development of long-term savings And risk-based business, and strengthen the risk of two major risks of the control.

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