Insurance sector to focus on risk control, management curbs
Risk control will remain a top priority in China’s insurance sector, with tougher measures like limiting the share ownership of single share owners, a top official from the China Insurance Regulatory Commission said.
Single share owners will no longer be allowed to hold more than one third of shares in an insurance firm, down from the previous 51 percent, to prevent a single party enjoying too much power in making investment decisions, Chen Wenhui, vice chairman of the CIRC told the People's Daily yesterday.
The commission will also study the feasibility of creating a “black list” for professional managers in the sector. It will establish a multi-level prevention system to cope with deep-rooted malpractices such as offering misleading information in sales, making claims difficult and cheating for compensations.
"Preventing systemic financial risk is the eternal theme of financial work," Chen said. "As an industry to control risks and decentralize them, insurance itself should pay more attention on risk management and develop more steadily."
The industry has played an active role in serving economic and social development. It has provided an accumulated 1.6 trillion yuan (US$252.58 billion) of risk insurance for 180 million agricultural households, and 1.01 billion people have been covered by critical illness insurance.
Through investments in bonds and stocks, the insurance funds have directly raised over 7 trillion yuan for the real economy, and has supported the Belt and Road construction with 772 billion yuan in the form of debt investment plan and stock ownership plan.
"CIRC will continue to promote the insurance industry to play a long-term risk management and security function, thus better serving the development of real economy," Chen said.
Multinational insurance companies have set up 56 foreign-invested institutions in China, while China has established 37 insurance business institutions abroad with two of them becoming the world's top 10 insurance companies.
China has already announced that it plans to further open foreign investment in Chinese insurance institutions.
"In the next step, we will also push for more open policies in the free trade zone and reform pilot areas to encourage foreign investment in the insurance sectors such as health care and pension fund," Chen said.
He said that by increased supervision and opening up in an orderly manner and drawing from overseas experience, China would gradually grow in the international insurance sector.