A dispute between a bank and an insurance company made the outside world realize the hidden pitfalls of performance liability insurance. Relying on this kind of insurance, Dadi Property & Casualty Insurance has achieved leapfrog development and created the “Land Phenomenon”, but it has also caused many lawsuits.
Author | Chen Chang
Source | City Boundary
In the financial circle, banks and insurance seem to have always been “close comrades in arms”. But recently, China Everbright Bank took Continent Property Insurance to court, making the opposing side of the two public.
Recently, the Intermediate People’s Court of Dalian City, Liaoning Province announced the second-instance judgment. The defendant in the case is China Continent Property Insurance Co., Ltd. Dalian Branch (hereinafter referred to as “Continent Property Insurance”), and the plaintiff is China Everbright Bank Co., Ltd. “).
While the case disclosed the disputes between the two institutions, it also brought the “loan performance guarantee insurance” into the spotlight.
Performance bond insurance, also known as performance liability insurance, means that the insurance company promises to the beneficiary (that is, the investor) who purchases this type of insurance that if the policyholder (that is, the debtor, specifically refers to the borrower here) does not perform according to the contract or the law A form of insurance in which the insurance company bears the liability for compensation.
This type of insurance is essentially a loan credit enhancement method, which is widely used in bank loans, trust plans and Internet finance.
It stands to reason that with loan performance guarantee insurance, individual borrowers can solve the problem of personal credit enhancement at once and have the opportunity to obtain loans. At the same time, the bank has a bill, and the insurance institution has income. The cooperation between Continent Property Insurance and China Everbright Bank should be a win-win situation.
But this time, what happened between the two, and finally they had to confront Bo in court?
Moreover, China Continent Insurance is not the only institution that launched this product. Before it, PICC P&C Insurance lost nearly 8 billion yuan for this type of insurance, and ZhongAn Property & Casualty Insurance’s personal loan performance guarantee insurance was judged by the court to be an illegal financial business. This is another example why?
Borrower “runs away”
1.31 million yuan owed to Dadi Property Insurance
Things go back to three years ago.
On January 30, 2019, the borrower Zhang sought a loan from Everbright Bank, and the two parties signed a “Personal Loan Contract”, which dealt with the type, purpose, amount, term, interest rate, penalty interest, guarantee, and liability for breach of contract of the loan, etc. Made a detailed agreement.
But Zhang did not get the money immediately, but on February 1, two days later, he got a loan of 1 million yuan from China Everbright Bank.
During those two days, Zhang bought a loan performance guarantee insurance with a coverage of 1.07 million yuan from Continental Property Insurance. If he fails to repay the loan to China Everbright Bank later, the loan will be repaid by Continent Insurance.
Sure enough, the accident happened soon. After the loan expired, Zhang failed to repay the principal and interest of the loan as agreed. As of August 1, 2022, it was overdue for 924 days in total.
Therefore, Everbright Bank filed a claim application with Continent Insurance, but the other party has not paid the compensation.
Later, in the first-instance judgment, the court ruled that Continent Property & Casualty Insurance should repay Everbright Bank’s loan principal of 1 million yuan, interest, penalty interest and case acceptance fee of 14,890 yuan within 10 days.
However, Continent Property & Casualty Insurance expressed dissatisfaction, thinking that Everbright Bank had illegally lent money and should not be held responsible. The case was filed for second instance on October 8, 2022.
Continent Property & Casualty Insurance stated that on March 18, 2020, Everbright Bank, Continental Property Insurance and Dalian Huixin Huawen Asset Management Co., Ltd. jointly launched the personal performance guarantee insurance loan business. Two borrowers, including Zhang, needed a large amount of money, but they did not meet the requirements of the single loan amount and the conditions of use of the Everbright Bank’s business assistance loan. In order to obtain the loan, the two forged the certificate of the actual controller of the company and the property rights of the house. certificate, marriage certificate, divorce certificate and other materials, and handed over the loan materials and underwriting materials containing false materials to China Everbright Bank and Dadi Property Insurance, defrauding Everbright Bank for review and Dadi Property Insurance underwriting.
Dadi Property & Casualty Insurance believes that these two people are suspected of committing a crime, and the legal representative of Huixin Huawen Company surnamed Yang is an accomplice.
The judgment document also shows that in May 2020, after investigation by the Dalian public security department, Zhang and other two people were suspected of fraudulently obtaining loans, and there were criminal facts, so they decided to file a case for investigation.
Continent Property & Casualty Insurance believes that in this case, regardless of the criminal suspect, the nominal borrower, or the staff of Everbright Bank, any party involved in a criminal offense involves intentionally creating an insurance accident, and Continent Property & Casualty Insurance does not need to bear insurance liability.
The court finally determined that China Everbright Bank had made it clear in the first instance that it claimed rights against Continent Property Insurance based on the “Personal Loan Performance Guarantee Insurance Cooperation Agreement” and the supplementary agreement involved in the case. After review, the cooperation agreement and supplementary agreement were not for the purpose of defrauding loans And signed, there is no evidence to prove that the staff of China Everbright Bank is suspected of fraudulently obtaining loans. The relevant agreements and supplementary agreements are the true intentions of China Everbright Bank and Continent Property Insurance. The content does not violate the mandatory and effective provisions of laws and regulations, and should be valid.
In addition, the contractual relationship between China Everbright Bank and Continent Insurance is not the same fact and the same legal relationship as Zhang’s suspected loan fraud.
In the second instance, because the parties did not submit new evidence, the court rejected the appeal of Dadi Property Insurance and upheld the original judgment.
Figure/Visual China
The “guarantee insurance” of the moment
It is reported that on October 24, 2018, in line with the principle of complementary advantages and common development, China Everbright Bank and Continent Insurance signed the “Personal Loan Performance Guarantee Insurance Cooperation Agreement” and a supplementary agreement, agreeing that the two financial institutions will provide “Personal Performance Guarantee Insurance” Loans” and “Personal Loan Performance Guarantee Insurance” businesses.
The two parties agreed that the borrower would purchase the performance bond insurance sold by Continent Property Insurance, and submit the original copy of the relevant insurance policy to China Everbright Bank as a way of credit enhancement. issue related loans.
When the policyholder (borrower) fails to perform the repayment obligation in accordance with the loan contract, Continent Property Insurance shall be responsible for compensation for all remaining principal and corresponding interest of the policyholder in accordance with the provisions of the loan contract.
Chen Xue (pseudonym), a sales manager of an insurance company, told the city circles that most of this kind of insurance is sold by property insurance companies, and they cooperate with lending institutions to sell to individuals or businesses. Many lending institutions will require prospective lenders with poor qualifications to purchase a “performance bond insurance”.
For Dadi Property & Casualty Insurance, as early as 2015, the China Insurance Regulatory Commission approved its personal loan insurance, named “Dadi Shidai Insurance”, which aims to help more individual customers easily obtain loans from financial institutions without collateral.
At that time, it was the transition period of Continent Property & Casualty Insurance. Chen Yong, the general manager of Yunnan Branch of Continent Property & Casualty Insurance, was transferred to the headquarters because of his outstanding performance.
During Chen Yong’s tenure, Continental Property & Casualty Insurance established the Personal Loan Guarantee Insurance Division in 2015 to carry out credit insurance business with the business model of “Continental Time Loan Insurance + Fund Channel Loans”.
Since then, Continent Property & Casualty Insurance has achieved leapfrog development through credit guarantee insurance business, which is called the “Continent Phenomenon” by the industry.
From 2016 to 2018, the growth rate of the credit guarantee insurance business of Continent Property & Casualty Insurance was above 100%. In 2019, guarantee insurance was the company’s second-largest premium income insurance type, with income as high as 7.785 billion yuan, compensation payments of 1.922 billion yuan, and underwriting profits of 293 million yuan.
In contrast, the company’s auto insurance business, which has the highest premium income, has an income of 27.99 billion yuan, but its underwriting profit is 633 million yuan.
Running too fast is often prone to falling. The business of Dadi Property & Casualty Insurance has not been completely smooth sailing.
In 2020, the regulatory authorities have successively issued documents to regulate the financing credit insurance business. Continent Property & Casualty Insurance, which is doing well, is considered by public opinion to be suspected of selling insurance with loans, covering risks with high-priced insurance, and pushing up borrowers’ loan interest rates.
According to media reports, when many consumers applied for bank loans with the help of Continent Insurance staff, they signed the insurance policy inexplicably, and they did not clearly know the need to purchase insurance and the content of the policy before the loan.
Another consumer complained that the cost of borrowing was secretly pushed up. For example, a borrower applied for a loan of 50,000 yuan in 36 installments at Continental Insurance, and the fund was “Huizhou Branch of China Everbright Bank”. Need to pay a total of 30,600 yuan in insurance fees, accounting for 61.2% of the total loan amount.
Chen Xue revealed that this kind of bundling and induced sales does exist in the industry. If employees of insurance companies want to get insurance premiums, they will recommend loans to consumers with “low loan interest rates”, and will not actively and clearly tell consumers to purchase insurance business jointly.
As various problems surfaced, Dadi Property & Casualty Insurance was also backlashed by the guarantee insurance business.
In 2020, the company’s guarantee insurance business will shrink to 6.896 billion yuan, and there will be a loss of 8.61 million yuan. In 2021, the premium charges will continue to decrease to 5.918 billion yuan.
At present, Dadi Property & Casualty Insurance is still continuing to sell Dadi Shidai Insurance for enterprises. Its staff told the city circles that there is no personal credit loan guarantee business in Beijing. Personal Mortgage Guarantee Business.”
Why is the loan performance insurance all over the place?
Dadi Property & Casualty Insurance is not the only one that has been disgraced by selling loan performance guarantee insurance.
Since March 2018, PICC P&C has provided performance guarantee insurance for the 9F platform. 9F is one of the platforms where PICC P&C has carried out in-depth “Internet finance” business cooperation. According to the official website of PICC, PICC has cooperated with Jiufu Data Science, 360 Finance, Meituan, Naquhua under Ctrip Finance, Xiaohua Technology under Zhongtenxin, Huanbei, Mima Financial Services, ZTE Feidai, Haier Xiaojin, etc. 12 platforms.
However, PICC P&C did not benefit from this. On the contrary, because a large number of borrowers were overdue, PICC P&C paid compensation according to the contract, resulting in a serious loss in this business.
The annual report shows that from 2018 to 2020, PICC P&C’s underwriting profits for “credit guarantee insurance” were 185 million yuan, -2.884 billion yuan, and -5.104 billion yuan respectively.
In the second half of 2019, PICC Property & Casualty Insurance stopped underwriting new credit guarantee insurance businesses such as Yirendai, Mimo Financial Services, Naquhua, Feidai, and Youxin Pratt & Whitney.
Not only that, but the cooperation between PICC Property Insurance and the platform is also very unpleasant. At the end of 2019, it terminated its business cooperation with 9F, and then 9F sued PICC P&C for compensation of about 2.3 billion yuan in unpaid service fees and late fees.
A number of people in the insurance industry told the market that, like PICC, the popularity of most personal loan performance insurance is closely related to the development of P2P online lending, and loan performance insurance once became the standard configuration of P2P companies.
Fenghuang.com WEMONEY has done incomplete statistics. The participating online lending platforms include Lujinfu, Yirendai, Xiaoying Wealth Management, Jiufu Pratt & Whitney, Hexindai, Phoenix Finance, Bangronghui, Jingronghui, and Pony Finance. , Rice Tank Finance, Gold Investment Bank, Bee Money, etc. The insurance companies that cooperate with them include Yongcheng Insurance, Ping An Property Insurance, PICC Property Insurance, Zhongan Insurance, Taiping Property Insurance, Changan Insurance, Tianan Property Insurance, Fudecai Insurance, Huaan Property Insurance, Anxin Property Insurance and more than 10 companies.
Since the second half of 2018, there has been a “thunderstorm” wave in the P2P industry, and insurance companies are hardly immune. The more platforms insurance companies cooperate with, the more tragic the impact will be.
For example, Changan Liability Insurance cooperated with as many as 10 P2P platforms from 2014 to 2018. At the beginning of 2019, the China Banking and Insurance Regulatory Commission issued a regulatory letter to Changan Liability Insurance. The reason was that its capital was insufficient. At the end of the third quarter of 2018, the solvency adequacy ratio was not up to the standard (-41.50%), and the comprehensive risk rating was reduced to the lowest category D .
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In the view of Zhao Dawei, an insurance marketing expert and partner of Qianqian Molecule, the reason for the lack of loan performance insurance is that, in addition to being affected by the online lending industry, the insurance industry has insufficient experience in lending scenarios.
“Credit risk is completely different from birth, death, disability insurance or value preservation and appreciation funds. The former mainly focuses on KYC (Know Your Customer, that is, fully understand your customer) and KYB (Know Your Business, fully understand your business) above, but the insurance industry is almost zero good at these.” Zhao Dawei told the market circle.
In his view, in most cases, guarantee insurance only assumes the role of a bill-issuing channel, collecting premiums and at the same time providing credit endorsement for consumers. It’s okay when the economy is good, but once there are asset-side fictitious situations, insurance institutions have to bear a lot of risk with a little premium.
In the case of ever-increasing product risks, in order to protect their own interests, insurance companies continue to violate regulations, which has also attracted the attention of regulators.
In 2020, the terms of Taiping Property & Casualty Insurance’s private reform filing were named by the China Banking and Insurance Regulatory Commission. What happened was that Taiping Property Insurance signed the “Second-hand Car Dealer Financing Project Loan Performance Guarantee Insurance Cooperation Agreement” with a financial leasing company. The car dealer is the policyholder and the leasing company is the insured.
Later, Taiping Property & Casualty Insurance added a “Supplementary Agreement”, and the actual overall compensation liability changed from the insurance amount of 168 million yuan to 110% of the actual premium received, that is, 3.483 million yuan, and the difference between the two was nearly 165 million yuan.
Up to now, many property and casualty insurance institutions, such as China Insurance and Pacific Property and Casualty Insurance, have been told that there is no personal loan performance insurance business.
Some insurance salesmen revealed that loan performance liability insurance is available for enterprises, but not for individuals. “There have been too many accidents, such as banks and customers collectively defrauding insurance companies, etc., which led to the country stopping many cases.”
In his view, people with good credit and the ability to repay will not seek shortcut loans too much. “Insurance companies are not stupid. No one wants to do business at a loss. The function of this type of insurance is to increase credit. If you really don’t pay the payment, there will be an insurance company to help you pay it back, but the credit investigation has changed from bank overdue to insurance compensation. The adverse effect is very large.” The salesman reminded.
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