The China Insurance Regulatory Commission ("CIRC") has recently issued the Interim Measures for the Regulation of Credit Guarantee Insurances (the "Measures"), which will enter into force immediately from the date of promulgation and remain in force for a period of three years.
The Measures introduce a negative list to provide for the business scope and market behaviors for credit guarantee insurances. First, insurance companies are prohibited from providing credit guarantee insurance products and services for some financing behaviors. Second, they are also forbidden to underwrite those credit guarantee insurance business that goes against insurance principles or involves interest rates higher than the maximum criteria specified by the State for loans, or carry out credit guarantee insurance business by splitting the term of the insurance policy or the insurance amount, or arriving special agreements in the insurance policy or entering into supplementary agreements. Thirdly, they are not allowed to have cooperation with any P2P lending platforms which do not comply with relevant provisions on the internet finance, or underwrite credit guarantee insurance business for P2P lending platforms beyond the stipulated quota. In addition, the Measures require insurance companies to strengthen risk management and control, and further lay down explicit provisions from the perspective of the financial accounting, withdrawal of reserves, credit examination, paths for repayments, and management of pledges. Further, the Measures propose to set up the reporting system, and specify the regulatory authorities and circumstances requiring punishment.