China is adding more teeth in its ongoing series of crackdowns.
This time, it has set its crosshairs to insurance technology platforms as part of an online insurance rectification campaign whose objective is to make insurtech firms into regulatory compliance.
China has launched a five-year blueprint seeking broader regulation of major sectors of the economy, rolling out a wider clampdown on key industries that have given capitalists the jitters.
On Wednesday, the China Banking and Insurance Regulatory Commission announced it would carry out a special action to fix the country's messy online insurance space.
The new regulatory measure will make it mandatory for insurance technology firms to end their unlawful acts like misleading marketing and pricing practices and improve user privacy safeguards, Bloomberg News reported.
According to CBIRC, failure by companies to comply with the new requirement would result in "severe punishment."
The regulator has also stepped up measures to include some of China's top education tech, short video platforms, and ride-hailing companies in its dragnet.
The regulator's "notice on online insurance disorders" seeks to identify violations of the country's web-based insurance activities set to be finalized by the end of October 2021.
But, before that, each insurance company is mandated to form a group that will focus on regulatory compliance and creates a measure that will iron out kinks on non-compliance issues by August 15.
Investors have been trying to make sense of China's widening regulatory campaign in recent weeks that has shaken markets, particularly after regulators pulled the plug on profits in the $100 billion after-school tutoring segment.
The latest move on insurance tech firms is seen to stunt growth in an industry projected to soar to 2.5 trillion yuan ($385 billion) in 10 years. CBIRC did not immediately respond to a request for comment.
But, some market observers welcomed the move as an attempt by China's officials to help investors get a better insight on the motives behind the regulatory push.
China's State Council warned Wednesday that more legislations are in the offing to regulate national security, tech development, and anti-monopoly.
