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June 7, 2017

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CIRC to boost standards

CHINA’S insurance regulator is set to tighten standards on the management of liability, investment, and liquidity risks as it assesses solvency requirements for the second year, PricewaterhouseCoopers said in a report yesterday.

The China Insurance Regulatory Commission is now prioritizing management of assets and liabilities in tandem with moves on financial deregulation in the country to lower risks in banking, securities, insurance, and asset management sectors, said Jimi Zhou, PwC China financial services consulting partner.

There will also be a stronger regulatory focus on investment risks amid greater volatility in stock and alternative investment markets, Zhou said.

“The regulator will also put greater emphasis on the actual implementation of risk control measures rather than the set up of a management framework as it did in the first year of implementing the Solvency Aligned Risk Management Requirement and Assessment,” Zhou said.

Under SARMRA, the CIRC assigns a score to each insurance company after assessing their risk levels and management capabilities. Companies with scores below 80 will face a higher solvency requirement.

Last year’s results showed the average score for insurance companies in China came in around 74 points.


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