Circular of the China Insurance Regulatory Commission on Further Strengthening Insurance Regulation to Maintain the Steady and Sound Development of the Insurance Industry

Circular of the China Insurance Regulatory Commission on Further Strengthening Insurance Regulation to Maintain the Steady and Sound Development of the Insurance Industry

Bao Jian Fa [2017] No. 34

April 20, 2017

All departments of authorities and insurance regulatory bureaus:

In order to thoroughly implement the guidelines of the Sixth Plenary Sessions of the 18th Central Committee of the Communist Party of China(CPC) and the Central Economic Working Conference, especially the important instructions of General Secretary Xi Jinping on financial work, implement the deployments of the Party Central Committee and the State Council on risk control in the financial sector and specify tasks and requirements in the current and the upcoming period on strengthening insurance regulation, controlling the market disorder, making up for regulatory weakness and preventing industrial risks, a notice is given concerning relevant issues as follows:

I. The current situation facing the insurance industry
Since the 18th National Congress of the CPC, under the correct leadership of the Party Central Committee and the State Council, the insurance industry has been firmly adhering to two main lines of serving the supply-side structural reform and poverty alleviation strategy and has sustained rapid growth, constantly enhanced the guarantee ability and constantly improved the ability to serve the real economy. At the same time, we should clearly realize that domestic and foreign situations of the financial work is still complex; unstable and uncertain factors have not yet reduced; the basis for stable economic operation is still not firm enough; some difficulties and conflicts continue to be reflected in the financial sector. The insurance industry, as an important part of the financial sector, still faces the complex situation with joint functioning of multiple factors and the interaction of multiple factors.
In the latest period, in the context of complex interest rate environment and large asset allocation difficulties, a few of insurance companies adopt radical development modes, thus leading to large liquidity risks due to serious mismatch between assets and liabilities; some insurance companies have problems of imperfect governance structure and internal control system, false capital contribution by shareholders, insider control and other problems; the insurance industry as a whole has adequate maintenance of repayment ability, but obvious individual differentiation, declination of repayment ability and the increase of companies in concerned areas can be observed, and consequently, local risks become larger and the quantity of risk points increases; some insurance companies have cross-field and cross-market acquisitions blindly as well as individual insurance capital management products with multilayer nesting, which may easily cause risk crossing transmission.
Protruding risks and problems of the insurance industry at present reflect the eager for quick success and instance success of some insurance companies.
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