Xiang Junbo said that (link in Chinese) the cost of breaking insurance regulations must be increased and any punishments enforced as some insurance companies repeatedly offend.
Punishments should include the removal of professional qualifications and banning people from operating, Xiang said.
Changes should also be made to way that transactions between insurance companies are administered, and how equities are managed, Xiang said.
Insurance premiums will exceed 3 trillion yuan (£3.5 billion) this year, Xiang said. Rapid growth in the industry has seen some Chinese firms making "fake" investments and capital increases, while shareholding structures are "suboptimal".
Strict controls and transparency are therefore needed on overseas investment by Chinese insurers, Xiang said, with proper regulation of loans and bonds issued by Chinese insurers abroad.
Controls are also needed on the shareholders of Chinese firms, with more transparent supervision of shareholding structures and the ultimate controlling shareholders of firms, Xiang said.
CIRC issued a warning in April (link in Chinese) on Chinese mainland residents buying insurance in Hong Kong. With higher incomes and increased awareness of the need for insurance, many mainland Chinese are choosing to buy insurance in Hong Kong. However, although the systems are similar, differences remain, CIRC said.
Hong Kong policies are not protected by mainland laws, and may be illegal for mainland customers, it said. There are also exchange rate and other risks involved for mainland customers buying from Hong Kong, it said.