People's Republic of China Financial Sector Assessment Program : Insurance Core Principles

The Chinese insurance sector is experiencing rapid growth, posing particular challenges to effective supervision. The sector has been growing by over 20 percent a year and there are ambitious government targets for further development. Many individ...

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Main Authors:	International Monetary Fund, World Bank
Format:	Report
Language:	English
Published:	Washington, DC 2017
Subjects:	INSURANCE MACROPRUDENTIAL SETTING SUPERVISION
Online Access:	http://documents.worldbank.org/curated/en/851601512539417471/China-Financial-sector-assessment-program-detail-assessment-of-observance-insurance-core-principles http://hdl.handle.net/10986/29049

id	okr-10986-29049
recordtype	oai_dc
spelling	okr-10986-290492021-05-25T09:52:10Z People's Republic of China Financial Sector Assessment Program : Insurance Core Principles International Monetary Fund World Bank INSURANCE MACROPRUDENTIAL SETTING SUPERVISION The Chinese insurance sector is experiencing rapid growth, posing particular challenges to effective supervision. The sector has been growing by over 20 percent a year and there are ambitious government targets for further development. Many individual, often newer, companies are growing at rates far in excess of the average. New entrants, products and distribution channels, combined with the liberalization of pricing, have increased competition. At the same time, slower economic growth and reduced investment returns are exposing many established life insurers to the risk of loss due to the rising value of their liabilities. Many non-life companies are moving into new lines of business as margins in established lines erode. While their customers continue to benefit from a dynamic market, there are risks to insurance companies’ business models, performance and to solvency as well as risks of misconduct in the treatment of insurance customers. There are particular challenges for insurance supervisors to remain abreast of developing risks, while continuing to strengthen the regulatory and supervisory system for the longer term. The China Insurance Regulatory Commission (CIRC) has been undertaking far-reaching reforms and modernization since the 2011 FSAP. It has focused its work on improving corporate governance, enforcing sound market conduct and reshaping the solvency standards into a modern, risk-based approach. The China-Risk Oriented Solvency Standards (C-ROSS) draw on international practices and experience in the Chinese market to define solvency requirements that generally reflect risk as well as rewarding sound risk management. By linking the framework to an in-depth assessment of risk management, C-ROSS has also equipped CIRC with a strengthened overall supervisory framework for solvency risk. As a result, CIRC has felt confident to relax or remove less risk-based requirements such as new product (and reinsurance contract) approval as well as detailed limits on insurers’ investments. In parallel with regulatory changes, it has been working to reform and develop the insurance market, liberalizing pricing controls and accommodating the development of new products, although restrictions remain on the access of foreign insurers, especially in life insurance. 2017-12-19T20:16:27Z 2017-12-19T20:16:27Z 2017-10 Report http://documents.worldbank.org/curated/en/851601512539417471/China-Financial-sector-assessment-program-detail-assessment-of-observance-insurance-core-principles http://hdl.handle.net/10986/29049 English Financial Sector Assessment Program (FSAP); CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC Economic & Sector Work :: Financial Sector Assessment Program Economic & Sector Work East Asia and Pacific China
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	INSURANCE MACROPRUDENTIAL SETTING SUPERVISION
spellingShingle	INSURANCE MACROPRUDENTIAL SETTING SUPERVISION International Monetary Fund World Bank People's Republic of China Financial Sector Assessment Program : Insurance Core Principles
geographic_facet	East Asia and Pacific China
relation	Financial Sector Assessment Program (FSAP);
description	The Chinese insurance sector is experiencing rapid growth, posing particular challenges to effective supervision. The sector has been growing by over 20 percent a year and there are ambitious government targets for further development. Many individual, often newer, companies are growing at rates far in excess of the average. New entrants, products and distribution channels, combined with the liberalization of pricing, have increased competition. At the same time, slower economic growth and reduced investment returns are exposing many established life insurers to the risk of loss due to the rising value of their liabilities. Many non-life companies are moving into new lines of business as margins in established lines erode. While their customers continue to benefit from a dynamic market, there are risks to insurance companies’ business models, performance and to solvency as well as risks of misconduct in the treatment of insurance customers. There are particular challenges for insurance supervisors to remain abreast of developing risks, while continuing to strengthen the regulatory and supervisory system for the longer term. The China Insurance Regulatory Commission (CIRC) has been undertaking far-reaching reforms and modernization since the 2011 FSAP. It has focused its work on improving corporate governance, enforcing sound market conduct and reshaping the solvency standards into a modern, risk-based approach. The China-Risk Oriented Solvency Standards (C-ROSS) draw on international practices and experience in the Chinese market to define solvency requirements that generally reflect risk as well as rewarding sound risk management. By linking the framework to an in-depth assessment of risk management, C-ROSS has also equipped CIRC with a strengthened overall supervisory framework for solvency risk. As a result, CIRC has felt confident to relax or remove less risk-based requirements such as new product (and reinsurance contract) approval as well as detailed limits on insurers’ investments. In parallel with regulatory changes, it has been working to reform and develop the insurance market, liberalizing pricing controls and accommodating the development of new products, although restrictions remain on the access of foreign insurers, especially in life insurance.
format	Report
author	International Monetary Fund World Bank
author_facet	International Monetary Fund World Bank
author_sort	International Monetary Fund
title	People's Republic of China Financial Sector Assessment Program : Insurance Core Principles
title_short	People's Republic of China Financial Sector Assessment Program : Insurance Core Principles
title_full	People's Republic of China Financial Sector Assessment Program : Insurance Core Principles
title_fullStr	People's Republic of China Financial Sector Assessment Program : Insurance Core Principles
title_full_unstemmed	People's Republic of China Financial Sector Assessment Program : Insurance Core Principles
title_sort	people's republic of china financial sector assessment program : insurance core principles
publisher	Washington, DC
publishDate	2017
url	http://documents.worldbank.org/curated/en/851601512539417471/China-Financial-sector-assessment-program-detail-assessment-of-observance-insurance-core-principles http://hdl.handle.net/10986/29049
_version_	1764468331496079360

People's Republic of China Financial Sector Assessment Program : Insurance Core Principles

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