THE growth of life insurance premiums in the mainland is set to stall this year as regulators crack down on the aggressive sales of universal life policies, market watchers said.

A decline in insurers’ investment returns was also cited by analysts as a cause for the predicted slowdown.

According to data from the China Insurance Regulatory Commission (CIRC), mainland premium incomes reached 3.1 trillion yuan in 2016, a year-on-year rise of 27.5 per cent.

Guo Zhenhua, head of the insurance department at Shanghai University of International Business and Economics, said growth could slump by almost half to as low as 15 per cent in 2017.

“Life insurance premiums, with a heavy reliance on investment-grade products, would slump amid tighter industry scrutiny, lower investment returns and economic slowdown this year,” The insurance regulator has already clamped down on the universal life products offered by insurance units under Baoneng Group and Evergrande Group.

They were among at least six insurers that recently faced penalties after their aggressive takeover attempts of listed companies attracted the scrutiny of financial regulators last year.o said, predicting that growth would be no more than 20 per cent this year.

Universal life products are essentially high-yield wealth management products and usually promise short-term gains. Aggressive insurers have been rapidly expanding this part of their business to shore up their premiums, pouring money into equity markets to meet the high returns they’ve promised to investors.

“Popular universal life insurance products in China are de facto short-term wealth management ones with limited insurance protection coverage which means no, or minimal, penalties for retail investors in early surrender in the first two years,” she said. “Such high cash value products are rare in other markets.