China Crack Down After Online Insurance

China's banking and insurance watchdog is stepping up scrutiny of the nation's insurance technology platforms, widening a regulatory dragnet that has roiled global investors. The regulator ordered companies and local agencies to curb improper marketing and pricing practices, and step up user privacy protection. It encouraged companies to address these issues voluntarily and said those that failed to comply would face "severe punishment".

The sweeping order goes beyond the targeted action that has hit a few listed companies including Waterdrop Inc and operations backed by Ping An Insurance Group Co in the months since China began a broad crackdown on its fintech sector this year. It has since moved to rein in some of its biggest technology companies, as well as edtech, ride-hailing, and short video platforms.

The online insurance industry had been expected to grow to 2.5 trillion yuan (US$385 billion) in a decade. The China Banking and Insurance Regulatory Commission (CBIRC) did not immediately respond to a request seeking comment.

Just a year ago, the insurance industry seemed ripe for disruption as start-ups vowed to transform traditional practices with technology. Regulators have since moved to shutter operations including crowd-sourcing healthcare platforms operated by Waterdrop and Ant Group Co.

Investors and companies have poured an estimated 45 billion yuan into insurance technology. By the end of 2020, more than 140 insurance companies in China had started online insurance businesses, with total premiums of 298 billion yuan for the year, or 6% of the industry total.