BEIJING, Nov. 23 -- China Insurance Regulatory Commission (CIRC) yesterday launched insurance clauses and premium rate management regulations for property and casualty companies, a move to encourage insurers to develop more products and innovations.

    "The new regulations simplify the examination and approval procedure for new insurance products," said the industry watchdog. And the new regulations will come into effect from January 1 next year.

    According to the new regulations, there are two ways to manage the new products: examination and approval; registering on records.

    Only four types of insurance product, including compulsory insurance, car insurance, investment-oriented insurance together with guarantee insurance and credit insurance longer than one year, should go through the examination and approval process. Insurers have to get the nod from the CIRC first in terms of the insurance clauses and premium rate of these products before they sell them.

    For other types of products, insurers can sell products first and put them on the CIRC's records afterwards for possible enquires. The industry watchdog will not carry out rigorous examinations on these products before their debut in the market but it will reserve the right to take regulatory measures later.

    "This is good news for us, and it means we will have a bigger say in developing and managing products" Du Xia, the general manager of the products development department of Anbang Property & Casualty Insurance Co Ltd, told China Daily.

    However, Du does not think that the new regulations will have a significant impact on insurers. "In fact, most of us followed similar practices in developing products in accordance with several notices from the CIRC before," Du explained.

    The CIRC has issued contemporary management regulations as well as three notices on insurance clauses and premium rates for property and casualty companies in the past two years. But all these will be revoked once the new regulations take effect.

    "Compared with the old notices, the CIRC has strengthened supervision of higher risk products," said Du.

    The CIRC has also enhanced insurers' management requirements in terms of legal liabilities when giving them a bigger role to play in product development. The industry watchdog also laid down corresponding punitive measures should insurers breach the regulations.

    According to Wang Guojun, an insurance professor with the University of International Business and Economics, the launching of new regulations follows the trend of the rapid development of China's insurance market.

    "The old examination and approval process was hardly able to satisfy a market that has been growing at a double digit pace over the past two decades." Wang told China Daily.

(Source: China Daily)