Insurers are banned from property speculation
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Insurers are prohibited from speculating in the property market in the name of investing in the real estate sector, the Securities Times reported Wednesday, citing Yang Mingsheng, vice chairman of the country's Insurance Regulatory Commission.
Chinese insurers are allowed to invest up to 10 percent of their assets in the real estate sector, such as to build communities for the elderly or develop medical service, according to the provisional measures. But they should not invest in commercial residences, directly participate in real estate development, or invest in establishing real estate enterprises.
Insurers showed high interest in investing the communities for the elderly, but such investments require large amounts of money with long payment cycles and risks, Yang said. He warned insurers to pay attention to those risks and banned them from land and properties speculation Insurers should communicate with the regulator in advance for such investments, said Yang.
Total assets of Chinese insurers reached 4.5 trillion yuan ($661 billion) in the first half of this year, which means they can invest more than 450 billion yuan in the real estate sector.
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