Circular of the China Insurance Regulatory Commission on the Issue of the "Implementing Guidelines for Comprehensive Risk Management of Personal Insurance Companies"
Circular of the China Insurance Regulatory Commission on the Issue of the "Implementing Guidelines for Comprehensive Risk Management of Personal Insurance Companies"
Circular of the China Insurance Regulatory Commission on the Issue of the "Implementing Guidelines for Comprehensive Risk Management of Personal Insurance Companies"
Bao Jian Fa [2010] No. 89
24 October, 2010
Life insurance companies, health insurance companies and old-age insurance companies,
The Implementing Guidelines for Comprehensive Risk Management of Personal Insurance Companies (hereinafter "Guidelines") have been formulated by the CIRC in order to strengthen the comprehensive risk management of personal insurance companies, further implement the Guidelines for Risk Management of Insurance Companies (Tentative Implementation) (Bao Jian Fa [2007] No. 23) and improve the comprehensive risk management level of companies. The Implementing Guidelines are hereby promulgated for implementation. The issues relevant to the implementation of the Guidelines are notified as follows:
1. Insurance companies shall attach high importance to comprehensive risk management and seriously organize the implementation and carry out such work in accordance with the requirements of the Guidelines, and report the name, duties and methods of correspondence of the person-in-charge of the risk management department before November 30, 2010. If the risk management department has not been set up for the time being, a contact person for comprehensive risk management shall be designated to submit the aforementioned information to us.
2. Companies shall establish the conditions and implement various requirements of the Guidelines as soon as possible. Where a company encounters real difficulties in establishing risk management committee, establish risk management information system and make use of economic capital methods in recent times, it shall establish a risk management committee and establish the risk management information system before October 1, 2013 at the latest and make use of economic capital methods to measure the risks assumed by the company in a reporting year from 2014 onwards. Prior to such time, the audit committee may take up the duties of the risk management committee for the time being.
3. Life insurance companies, health insurance companies and old-age insurance companies shall, upon the effectiveness of the Guidelines, submit an annual risk management report in sextuplicate in accordance with requirements, which shall be deemed to have fulfilled the requirement of the document Bao Jian Fa [2007] No. 23 regarding annual risk evaluation report.
Implementing Guidelines for Comprehensive Risk Management of Personal Insurance Companies
Chapter I General Provisions
Article 1 These Guidelines are formulated in accordance with the Insurance Law of the People's Republic of China, the Provisions on the Administrative Provisions on Insurance Companies and other relevant laws, regulations and rules in order to strengthen the comprehensive risk management of personal insurance companies, further implement the Guidelines for Risk Management of Insurance Companies (Bao Jian Fa [2007] No. 23), improve the comprehensive risk management level of companies and safeguard the healthy development of the personal insurance industry and companies.
Article 2 For the purposes of these Guidelines, the term "companies" shall refer to life insurance companies and health insurance companies established in the People's Republic of China in accordance with the law.
Article 3 For the purposes of these Guidelines, the term "risks" shall refer to the uncertain factors that may create adverse impacts on the accomplishment of business objectives by companies.
Article 4 For the purposes of these Guidelines, the term "comprehensive risk management" shall refer to the continuous process of identifying the potential risks, forecasting the impacts arising from risks and effective management of the risks of companies in various stages with the participation of the board of directors, management as well as staff members of companies as a whole in the formulation of strategies and day-to-day operations. In the course of comprehensive risk management, companies shall also exercise key monitoring, safeguarding and eliminating the risks that have significant impacts on company operations subject to the circumstances of company operations.
Article 5 The comprehensive risk management of companies shall follow the fundamental principles:
1. Principle of Consistency. Where a company establishes a comprehensive risk management mechanism, it shall ensure the consistency between risk management objectives and strategic development objectives.
2. Principle of Proportionality. In the process of comprehensive risk management, a company shall ensure that company capital level is proportionate to the risks assumed, and the risks assumed are proportionate to revenue.
3. Principle of Comprehensiveness. The comprehensive risk management of a company shall penetrate into all businesses of the company with full understanding, analysis and management of each type of risk.
4. Principle of All-person Participation. A company shall establish the risk management culture of all-person participation and the relevant mechanism. Staff at all levels shall participate in the risk management work of the company subject to their duties and assume the duties of day-to-day risk management.
5. Principle of Quantitative and Qualitative Integration. A company shall develop the risk quantitative technology subject to individual business nature, scale and degree of complexity, and promote and apply advanced risk management experience to realize the organic integration of quantitative and qualitative factors.
6. Principle of Continuing Improvement. A company shall continuously inspect and evaluate both internal and external business management environment and changes in the competition structure, and the actual impacts brought about by comprehensive risk management of the company, and timely adjust and improve the risk management policy, system and workflow.
Article 6 A company shall follow the relevant requirements of these Guidelines and establish a comprehensive risk management mechanism commensurate with the business nature, scale and degree of complexity of the company, effectively identify, evaluate, measure, respond and monitor risks. Various requirements of comprehensive risk management shall be closely integrated with company management and business flow.
Article 7 The CIRC shall exercise supervision and administration of the comprehensive risk management of the company and urge the company to effectively identify, evaluate, measure, respond and monitor various risks.
Chapter II Risk Management Environment
Article 8 A company shall integrate the risk management culture establishment into corporate culture establishment, and cultivate risk management culture and environment at all levels of enterprises internally, continuously revise and improve risk management system, workflow, continuously strengthen the establishment of risk management organization, study the establishment of risk management consciousness to ensure the realization of risk management objectives.
Article 9 A company shall strengthen the risk management awareness of all staff and transform the risk management awareness into the common understanding and self-initiative action of staff and enable the company to establish a risk management mechanism that is systematic, regulated and effective.
Article 10 A company shall significantly strengthen the promotion activities for risk management of all staff, establish enhanced staff pre-job and on-the-job risk management training and education system.
Article 11 A company shall establish a risk responsibility mechanism, and the management of the company shall assume leadership responsibility and determine the person-in-charge for major risks, and the specific risk responsibility lies in functional departments and business units.
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