What’s new: China is studying rules to govern risk disposal by property insurers to establish a standardized and market-oriented mechanism, according to a senior regulatory official.
The regulator will mobilize resources to advance risk disposal by high-risk insurance institutions and work on regulations to establish a well-functioning mechanism for market-oriented, rule-based, standardized risk disposal, Li Youxiang, director of the property insurance department of the China Banking and Insurance Regulatory Commission (CBIRC), wrote in an article published by an industry journal backed by the commission.
Regulators will pay close attention to insurers suffering long-term losses, corporate governance issues and significant solvency pressures to formulate risk prevention and resolution plans in a timely manner to prevent them from becoming high-risk institutions, Li wrote.
The context: China has pushed forward restructuring of several insurance companies with high-risk exposures over the past few years as part of a broader campaign to defuse financial risks. That included four insurance companies linked to Tomorrow Holding Co. Ltd.
China’s property insurers generally reported improved profitability in 2022, but a large number of smaller players are prone to business weakness and risks. According to an assessment by the CBIRC in the fourth quarter 2022, 27 of the 181 insurers reviewed fail to meet solvency requirements.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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