Sus­tain­able Prof­itabil­ity is Key for Non-life In­sur­ers in China

Insurance - - CONTENTS - Text Con­trib­uted by A. M. Best Asia-Pa­cific Ltd

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.

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