The Virtual Supervision of Foreign Insurance Leads to the Spread of Financial Risks

The expansion of foreign insurance companies in various markets has brought many regulatory challenges. This study aims to reveal the potential threat that the virtualization of foreign insurance regulation poses to financial stability, analyze the reasons behind it, and propose countermeasures. The research focuses on the foreign insurance industry because of its rapid growth in the Chinese market, but the relevant regulatory system is relatively lagging behind. The research focuses on foreign insurance companies due to regulatory loopholes in their business operations, such as blurred insurance license boundaries and insufficient financial risk control, which can potentially trigger systemic risks. However, existing research on the systematic analysis of regulatory fraud in foreign insurance companies is relatively weak, lacking comprehensive risk assessment and response mechanisms. The main focus is on the issue of financial risk spread caused by the lack of regulation on foreign insurance, including vague management of foreign insurance licenses, financial risk spread caused by regulatory virtualization, and the negative impact of financing guarantee system reform. Through case analysis, reveal the risk management blind spots of foreign insurance companies in market expansion. Therefore, establishing a sound risk management system, strengthening insurance takeover mechanisms, and promoting consumer education are the key to solving the problem. Theoretical research has expanded the depth and breadth of insurance regulatory theory, and its practical value lies in providing actionable risk management recommendations for regulatory policy makers. However, research also faces limitations such as data availability and industry complexity, and further in-depth exploration of the regulatory coordination mechanisms of multinational insurance companies in different jurisdictions is needed in the future.