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Regarding universal insurance, the notice clearly states that "the assets of the universal separate account shall be managed separately and accounted for independently. Policies managed by the same universal separate account shall use the same settlement rate. The establishment of the special reserve of the universal separate account and the injection of capital into the universal separate account shall meet the prescribed conditions. When the actual ROI rate of the universal account is less than the actual settlement rate for three consecutive months and the special reserve cannot make up the difference, the actual settlement rate of the month shall be adjusted in accordance with relevant regulations."
In response to the issue of insurance product term mismatch, the China Insurance Regulatory Commission also requires insurance companies to submit data such as 2015, 2016, and existing business as of the end of 2016 according to the product term.
According to the data obtained, although some business "aggressive" insurance companies had higher universal insurance settlement rates in December last year, some insurance companies have begun to actively reduce their expected earnings during the good start of this year.
Data show that more than a dozen insurance companies, including listed companies and "professional accounts", have limited the sales of universal insurance during the good start period of 2017 (first quarter/January), and reduced the expected income of universal insurance. The expected annualized yield of universal insurance products of multi-insurance companies for 1-year to 3-year periods has dropped to about 3%.
Many securities firms expect the scale of universal insurance to decline this year
Recently, Ping An Securities, Changjiang Securities, Haitong Securities, China Bond Credit and other research institutions predict that in 2017, universal insurance will usher in a turning point, and insurance premiums and growth will decline.
In recent years, the scale of universal insurance in our country has grown rapidly. In 2015, the growth rate of universal insurance premiums reached 95.2%. In 2016, the cumulative new payment scale of policyholders' investment funds mainly based on universal insurance has reached 1.10 trillion yuan, accounting for 34.0% of the scale of life insurance premiums. In this case, the risk of universal insurance has gradually emerged. First, the mismatch risk that the duration of liabilities is lower than the duration of assets. Second, the marketing cost of universal insurance is relatively high, and most of them surrender in the short term, which may bring greater cash flow pressure to insurance companies.
According to the analysis of Ping An Securities' non-bank team, last year, the China Insurance Regulatory Commission issued a series of policies to supervise universal insurance, and some insurance companies have begun to actively adjust the interest rate of universal insurance, which will have a greater negative impact on the growth of insurance premium income in 2017. The core of the regulatory policy is to make universal insurance long-term and implement stricter total control on medium and short-term products. Since May 2016, the monthly increase in insurance premiums for universal insurance has declined significantly, and it is expected that the overall scale of universal insurance may contract slightly in 2017.
"Some insurance companies themselves have high-yielding projects, and the purpose of raising funds is achieved through the rapid expansion of the scale of insurance premiums at the underwriting end. In terms of regulatory policies, the policy orientation of the medium and short-term duration business is clear. It is mainly aimed at insurance companies with a relatively high proportion of universal insurance. In order to limit their excessive expansion, it is controlled, and regulatory policies are constantly introduced. Overall, universal insurance will be under the direct policy guidance and the relevant market environment and other factors in the future, and the scale and settlement interest rate are expected to gradually decline." China Bond Credit predicted in a recently released research report.
Haitong Securities analysis report also pointed out that the main source of insurance premiums for small and medium-sized insurance enterprises is the short-term business such as universal insurance. The Insurance Regulatory Commission continued to strengthen the supervision of universal insurance, which significantly reduced the new premium insurance of small and medium-sized insurance companies with high debt costs. For crazy insurance institutions, it undoubtedly cut off their "ammunition supply".
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