Sustainable Profitability is Key for Non-life Insurers in China
TIN MAY 2013, THE CHINA INSURANCE REGULATORY COMMISSION (CIRC) ISSUED
THE “CHINA RISK ORIENTED SOLVENCY SYSTEM CONCEPTUAL FRAMEWORK” (C
ROSS) TO ENHANCE INSURERS’ RISK MANAGEMENT CAPABILITY AND PROMOTE HEALTHY AND SUSTAINABLE DEVELOPMENT OF THE INSURANCE INDUSTRY IN CHINA.
THE PROPOSED TIMEFRAME FOR FULL IMPLEMENTATION OF THE NEW SOLVENCY
SYSTEM IS THREE TO FIVE YEARS. he new framework is designed to embody and reflect the unique features of solvency supervision in China. Nonetheless, the fast-changing operating environment and developing regulatory requirements may present unprecedented opportunities and challenges for market participants. This report aims to illustrate A.M. Best’s view on the impact of implementing a risk-based solvency regime on the Chinese non-life insurance industry and to investigate the major drivers for improving the market’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Our goal is to shed some light on the pace of C-ROSS roll-out as well as underlying challenges to the overall industry.