Chinese life insurers face new risks and challenges from investment liberalisation

Chinese life insurers face new investment risks from issues such as complexity and non-transparency, after the country’s insurance regulator earlier this year broadened the investment scope for insurers by allowing them to hold a wider range of investments, said a report by Fitch Ratings.

Joyce Huang, director of Fitch Ratings’ Asia-Pacific insurance team and author of the report, told Compliance Complete that life insurance companies in China need to be fully prepared to face challenges posed by the range of new investment products.

"Generally, products will be more complicated, [and] it is not that transparent compared to if [life insurance] companies buy government bonds or corporate bonds," she said. "Usually they [government and corporate bonds] have ratings -- that would be the main difference. Liquidity can also be an issue due to no secondary market being available."

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