Quick Take: Midsize Insurer Fined for Doctoring Accounts, Eavesdropping

A unit of a midsize Chinese insurer was fined 900,000 yuan ($133,000) for falsifying its financial records and eavesdropping on government inspectors, the insurance regulator said.

The Shandong provincial bureau of the China Insurance Regulatory Commission (CIRC) handed down the penalty on Monday.

It said in a statement that the Weifang unit of state-owned Yingda Taihe Property Insurance Co. cooked its accounts and lied about its expenditures. The bureau also said the insurance unit planted eavesdropping devices in the room where inspectors were examining the company’s books.

This case came as China was focusing on reining in risks within the financial system. Since early this year, the CIRC has tightened its oversight on insurers’ investment activities, risk control, marketing and design of policies. The aim is to uncover and stop irregular, illegal and risky practices that could upend insurers as well as the industry.

Insurers should “return to the core business” and “serve as a shock absorber for the society and a stabilizer for the economy,” CIRC Vice Chairman Liang Tao said recently.

Based in Beijing, Yingda Taihe has registered capital of 3.1 billion yuan ($459 million), and all of its 27 shareholders are state-backed enterprises, with State Grid Corp. of China the company’s controlling shareholder. As of the end of the first quarter, Yingda Taihe has a core solvency adequacy ratio of 152.47%. The ratio, which compares the company’s core capital to the minimum capital required by regulators, is a gauge of a company’s capability to cover its liabilities.

Contact reporter Dong Tongjian (tongjiandong@caixin.com)