More rules on investment-linked insurance products welcomed

The securities regulator's plan to tighten the rules on investment-linked insurance products is more an opportunity than a threat, one insurer says.

James Tan, general manager of British insurer Friends Provident International's Asia, Middle East and Africa operation, said proper regulation would ensure investor protection, which is important for the development of investment-linked insurance products.

"We always make sure our insurance brokers make policyholders fully aware of the risks and other details of the policies before they buy the products. We welcome proper regulation on the sales process," Tan told the South China Morning Post.

The chairman of the Securities and Futures Commission, Carlson Tong Ka-shing told the Post earlier this month that the regulator was in talks with the government to tighten the rules on the products, particularly the sales process.

The products are currently not regulated by the securities watchdog, and salespeople are not required to obtain an SFC licence.

Tan said the real challenge for investment-linked products was not the proposed tightening of regulation but the market volatility.

"We have seen sales of investment-linked products going down in recent months in step with market volatility. Policyholders have been opting for simpler products to pre-empt losses," he said.