China Life and PICC fall foul of state auditor

China’s National Audit Office
(NAO) has uncovered non-compliance issues in operations and
accounting at two of China’s largest insurers during an inspection
of their 2009 accounts, reports the country’s official news agency
Xinhua.

The companies involved are
China Life Insurance (Group) Company, the parent of China’s largest
life insurer, China Life, and People’s Insurance Company of China
(PICC), the parent of China’s largest general insurer, PICC
Property & Casualty.

According to Xinhua, at China
Life, NAO auditors found CNY698m ($106m) of non-compliance in
insurance operations and CNY380m in accounting
non-compliance.

Xinhua noted that at China
Life, the operations misconduct included registering individual
clients under the name of corporate clients, promising fixed
earnings, and relaxing insurance restrictions.

In December 2009, for
example, its subsidiary in Qiqihar in China’s Heilongjiang Province
sold insurance policies worth CNY10.55m to its own employees. The
next month all of the polices were withdrawn.

According to the NAO’s
report, Xinhua said: “The subsidiary contrived the sales trick to
fulfil its annual sales quota.”

At PICC, the state auditor
found CNY5bn of non-compliance in operations and CNY440m of
non-compliance in accounting.

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