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 The draft regulations, announced by the China Insurance Regulatory
Commission (CIRC) last month, state that insurance companies, along
with their holding companies and asset managers, should prioritize
the purchase of "secure and controllable" products, including
domestic encryption technologies and local hardware and software.
More than 20 foreign business lobbies, including the American
Chamber of Commerce, the American Council of Life Insurers, and
Japan Electronics and Information Technology Industries Association
(JEITA), stated that such provisions would run counter to global
information security standards, in a joint letter to CIRC which they
delivered at the end of last month.
"We urge CIRC to avoid the risks associated with exclusive reliance
on localized solutions, prescriptive technologies and restrictions
on data flows," the lobby group said in the letter.
"By excluding foreign technology that may be the most secure, this
approach is likely to result in less secure digitalized operations,"
they said
The business lobbies, which represent insurance firms and tech
companies from the United States, Canada and Europe, also called on
CIRC to provide sufficient time for consultation.
Reuters obtained a copy of the letter, and people who saw the
version sent to the regulator confirmed its contents.
An official at JEITA, who declined to be named as they were not
authorized to speak to the media, said the letter was sent because
the draft rules because they were unclear and biased towards Chinese
products among other concerns.
The insurance regulator did not respond to requests for comment.
China's extension of its national security standards to the
insurance sector may revive a source of ongoing tension between
Washington and Beijing.
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In September 2014, the China Banking Regulatory Commission (CBRC)
and other state authorities jointly released an internal guidance
document on the application of "secure and controllable information
technology" for the banking industry.
The subsequent draft cyber banking regulations, which effectively
required foreign companies to surrender key technologies such as
source code and encryption algorithms to Chinese authorities, drew
criticism from the U.S. government.
Implementation was publicly suspended in April, in what was seen as
a diplomatic victory for the Obama administration.
In August, however, officials from the banking regulator told
representatives of several Western tech firms that they would seek
opinions on a new version of the bank procurement rules.
Financial industry experts said it is unclear whether China's
insurance regulator will revise its rules in response to the
business lobbies' comment.
On October 30, the CIRC extended its comment period on the draft
rules by two weeks until November 15, a move which critics of the
regulations said could be significant.
(Additonal reporting by Shu Zhang in BEIJING and John Ruwitch and
Kazunori Takada in SHANGHAI; Editing by Miral Fahmy)
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