(Bloomberg) -- China tightened rules for online insurance sales, seeking to root out irregularities in a burgeoning business that has bolstered platforms like Waterdrop Inc. and Huize Holding Ltd.

The new regulations allow qualified insurers and brokers to sell online life insurance nationwide while banning those that fail to meet requirements including a 120% minimum solvency ratio for four consecutive quarters, according to rules released Friday by the China Banking and Insurance Regulatory Commission. 

“Improper innovation” and “disorderly competition” by some players had hurt consumer rights and led to soaring complaints, the CBIRC said in a statement. The new rules seek to rein in risks, set up standards for innovation and support capable, compliant insurers to provide convenient services through technology including big data.

The watchdog has been stepping up scrutiny of insurance technology platforms as part of a broader campaign to rein in the influence of internet giants in financial markets. The tightening could slow growth in a market that China International Capital Corp. expects to grow to 2.5 trillion yuan ($391 billion) in a decade.

Read Bloomberg Intelligence research on China’s online insurance

Beijing-based Waterdrop, the insurance tech company that listed in the U.S. in May, said in its prospectus that further regulations could lead to “additional restrictions” on its business. In March, the company ceased its Waterdrop Mutual Aid business, which pools small monthly fees from members to cover those stricken by diseases, after rules changed. 

Insurers should “prudently” choose brokers as partners to sell their products online, and strictly manage their marketing behavior, according to the new rules. Products eligible for internet sales are limited to accidental, health, term life insurance and a few others. 

The new rules take effect immediately on any new online life business. Companies need to bring existing business into compliance by the end of the year, or stop online sales from Jan. 1 if they fail. 

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