Building a New Regulatory System for the Solvency of Insurance Companies

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clpstaff &clp articles

The promulgation of the Provisions for the Administration of the Solvency of Insurance Companies shows just how far China's insurance industry has developed through a regulatory framework which has come about following years of organic development. By Lü Guoming*, Dr. Xu Guojian & Pek-Siang Tee, Boss & Young, Shanghai.

The Provisions for the Administration of the Solvency of Insurance Companies (保险公司偿付能力管理规定) (2008 Provisions), originally announced by the China Insurance Regulatory Commission (CIRC) on July 10 2008, came into effect on September 1 2008. On the same day, the Provisions for the Administration of Insurance Company Solvency Quota and Regulatory Indices promulgated in 2003 (2003 Provisions) were repealed. The 2003 Provisions have enhanced the capability of China's insurance industry to prevent risks and played an active role in promoting the healthy and rapid development of China's insurance industry. According to CIRC officials, however, the 2003 Provisions are no longer adapted to the objective needs of the insurance industry's development, reform, opening-up and regulatory work after years of rapid development in the insurance industry and continuous reform in the financial sector. Therefore, the 2008 Provisions were enacted and promulgated to meet the new requirements of the insurance industry.1

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