China's insurance regulator is considering new measures that will brake firms' capacity to launch life insurance plans in the rapidly growing industry as part of moves to reduce the risk of defaults in the sector, local media reported on Tuesday.

China Insurance Regulatory Commission will set requirements linking insurers' capitalization levels to the approval of new life insurance products, Shanghai Securities News reported, citing unidentified industry sources.

In a bid to manage risks, the regulator will also ban firms from distorting the scope of their coverage, and from selling complex products that will be difficult for consumers to understand.

Rapid growth in China's insurance industry and investment into risky local infrastructure and housing projects have weakened the position of smaller insurers in particular, according to Bernstein research.

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