The China Insurance Regulatory Commission (CIRC) released on 25 December 2009 Draft Tentative Measures for the Administration of the Use of Insurance Funds (the "Draft Tentative Measures") for public consultation. This public consultation closed on 4 January 2010.
The purpose of the Draft Tentative Measures is to strengthen investment risk management control, according to CIRC.
Under the Draft Tentative Measures, insurance funds may be invested in bank deposits, bonds, securities, securities-linked funds and real estate. Nonetheless, the Draft Tentative Measures expressly state that insurance companies are prohibited from investing in ChiNext, which is a new stock market in Shenzhen established to provide growth enterprises with an avenue to raise capital. They also prohibit insurance companies from buying securities which are marked "Special Treatment" by the relevant stock exchanges. The Draft Tentative Measures further forbid insurance companies from investing in projects which do not comply with the State Industrial Policy (i.e. high energy consumption and high pollution projects) and projects which do not have steady cash flow returns.
A final version of the Tentative Measures is anticipated to come into force shortly.