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Christine Chan

Mainland insurance regulators have ordered Hong Kong-listed New World Infrastructure (NWI) to close its broking operations.

 The action is the latest sign of a renewed clampdown on unlicensed insurance-broking activities in the mainland.

 It comes a day after insurance regulators ordered an arm of the British-based Sedgwick Group to close for three months due to 'serious breaches' of regulations.

 NWI officials last night denied having an insurance-related operation and said they had heard nothing about being punished.

 However, industry sources said the company, the infrastructure arm of the New World Development group, had been singled out for criticism by the China Insurance Regulatory Commission (CIRC) in an industry circular.

 The circular said the company had been punished and ordered to cease its broking intermediary operations, according to sources who have seen the document.

 A CIRC source said: 'NWI is being punished and ordered to cease its broking operations because it continues to operate even after the March clampdown on insurance-broking intermediaries.'  The charge against NWI focused on certain broking-intermediary services involving general and construction insurance operations, sources said.

 It was unclear if the punishment and allegations would be announced publicly.

 'The decision has been made internally,' a CIRC source said.

 On Wednesday, the CIRC publicly censured Sedgwick Insurance & Risk Management Consultants (China) for operating an unauthorised broking business and other irregularities.

 The firm was ordered to close its mainland operations for three months from May 10 - the most severe punishment yet meted out to a foreign broker.

 Sedgwick is the mainland's only foreign broking company to receive Beijing's official sanction, but it is restricted to risk management consultancy services and is not allowed to conduct direct broking business.

 Industry analysts said the regulatory action was aimed at a growing force of unlicensed broking operations in the mainland that were engaged in cross-border broking arrangements.

 These were threatening to undermine the domestic insurance industry.

 A Beijing-based industry analyst said: 'Unauthorised broking operations have been so rampant, particularly in Beijing where a number of foreign companies have in one way or another engaged in cross-border broking intermediary operations.

 'The CIRC is very concerned about the unlicensed situation. It wants to weed out the irregularities before it gets out of control.'  A Shanghai-based industry analyst added: 'Already, we have seen brokers charging rates below the standard levels, while others are changing policy terms to gain business'.

 The clampdown is also part of a wider attempt by the commission to standardise market practices in a sector where regulations have been outstripped by the growth in business.

 Analysts said foreign firms would soon be allowed to operate direct insurance broking businesses in the mainland on a joint-venture basis as part of Beijing's moves to open up its financial sector. This has been delayed from last year.

 Last year, Beijing said it would soon give clearance for one or two large foreign insurance-broking firms to operate joint ventures in the mainland.



NWI ordered to exit mainland insurance