Revised solvency management rules should strengthen China's insurance industry - AM Best

KUALA LUMPUR, Jan 29 -- Global credit rating agency, AM Best views the announced changes to the solvency management of China’s insurance sector as a positive step, particularly in the reinforcement of balance sheet strength and development of enterprise risk management.

According to a statement, the China Banking and Insurance Regulatory Commission (CBIRC) has announced the changes would be effective, March 1.

In its new Best’s Commentary, ‘China Revises Solvency Management Rules to Strengthen Industry Capitalisation’, AM Best notes the revised rules will also form the foundation for the regulator’s upcoming release of technical adjustments to insurers’ solvency calculation as part of the wider China Risk-Oriented Solvency System Phase II implementation.

With the updated regulations, the CBIRC has defined the accountability of insurance companies’ directors and senior executives toward their companies’ capital management practices.

The regulations also require companies to form three-year rolling capital plans and perform stress tests, as well as regularly disclose solvency information.

These measures will allow for more dynamic and timely monitoring of insurers’ solvency health. Insurance groups, captive insurers, mutual companies and onshore branches of foreign insurance companies are also subject to the updated capital management regulations.

More details at www.ambest.com.

-- BERNAMA