CIRC to work on com­mer­cial en­dow­ment rules

China Daily (Hong Kong) - - BUSINESS - By CAI XIAO caix­iao@chi­

The China In­sur­ance Reg­u­la­tory Com­mis­sion said on Wed­nes­day that it is work­ing closely with the Min­istry of Fi­nance on reg­u­la­tions for in­di­vid­ual tax-de­ferred com­mer­cial en­dow­ment in­sur­ance, in the run-up to a pilot pro­gram which is to take place be­fore its wider in­tro­duc­tion.

En­dow­ment in­sur­ance is a form of life in­sur­ance, in­volv­ing a pay­ment plan, that pays the face value to the in­sured ei­ther at the end of the con­tract pe­riod or on the in­sured’s demise.

Tax-de­ferred en­dow­ment in­sur­ance is where the in­sured pays for pre­mi­ums be­fore tax pay­ments and pays their per­sonal in­come tax only af­ter the en­dow­ment ben­e­fits are col­lected.

“The time and con­di­tion of hav­ing the pilot is ma­ture and we are work­ing hard to per­fect reg­u­la­tions, to guar­an­tee fair­ness and funds se­cu­rity,” said Yuan Xucheng, di­rec­tor of the CIRC’s life in­sur­ance su­per­vi­sion de­part­ment.

The State Coun­cil on Tues­day re­leased a state­ment on step­ping up the pace of de­vel­op­ing com­mer­cial en­dow­ment in­sur­ance, in which it con­firmed that an in­di­vid­ual tax-de­ferred com­mer­cial en­dow­ment in­sur­ance pilot will start be­fore the end of 2017.

Yuan said the CIRC would se­lect qual­i­fied in­sur­ance com­pa­nies to par­tic­i­pate in the pilot, through a strict vet­ting and ap­proval process.

Hao Yansu, di­rec­tor of the school of in­sur­ance at the Cen­tral Uni­ver­sity of Fi­nance and Eco­nom­ics, said car­ry­ing out a tax-de­ferred com­mer­cial en­dow­ment in­sur­ance pilot was a wel­come de­vel­op­ment, but it should be con­ve­nient for peo­ple to join.

“As there are many min­istries and com­mis­sions in­volved in the pilot, the pro­ce­dures can be com­pli­cated,” Hao said.

“It is nec­es­sary to de­velop in­ter­net op­er­a­tions to fa­cil­i­tate in­sur­ance ap­pli­cants.”

Hao also said it was im­por­tant to en­cour­age in­sur­ance com­pa­nies to par­tic­i­pate in the pilot.

Ac­cord­ing to Yuan, China’s ag­ing pop­u­la­tion has be­come a se­ri­ous is­sue. By the end of 2016, China had 230 mil­lion peo­ple aged over 60, ac­count­ing for 16.7 per­cent of the na­tion’s pop­u­la­tion.

“De­vel­op­ing com­mer­cial en­dow­ment in­sur­ance is sig­nif­i­cant for per­fect­ing China’s multi-level ag­ing se­cu­rity sys­tem, deal­ing with ag­ing pop­u­la­tion is­sue and pro­mot­ing so­cial sta­bil­ity,” said the state­ment re­leased by the State Coun­cil.

The state­ment said China will en­cour­age the in­no­va­tion of com­mer­cial en­dow­ment in­sur­ance prod­ucts and ser­vices, sup­port­ing in­sur­ance in­sti­tu­tions to de­velop per­son­al­ized and dif­fer­en­ti­ated in­sur­ance prod­ucts for in­di­vid­u­als, fam­i­lies and en­ter­prises.

“China will pro­mote com­mer­cial en­dow­ment in­sur­ance funds, for them to have a safe and steady op­er­a­tion,” the state­ment said.

“Com­mer­cial en­dow­ment in­sur­ance funds can par­tic­i­pate in the na­tion’s im­por­tant pro­grams steadily and make over­seas in­vest­ments in a pru­dent way.”

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