From November 2 to 3, CISFC held the 27th Meeting of the Risk Assessment Expert Committee for Insurance Industry in Beijing. The meeting included three sessions, namely, life insurance, property insurance and funds utilization. A total of 25 experts and scholars from insurance companies, insurance asset management companies and research and consulting agencies discussed the development situation and risk status of the insurance industry.

    In terms of life insurance, experts indicated that the life insurance industry is currently in a critical phase in which we must absorb the effects of previous policies, deal with the tough challenges in the transformation period and resolve the asset-liability mismatch. Therefore, companies need to change to fine-grained and differentiated management, and pursue lower cost, greater efficiency and higher-quality development underpinned by investment, liabilities and internal management. Furthermore, experts stressed that companies should watch out for risks of fee loss and long-term spread loss. On the liability side, companies should lengthen the liability cycle, improve the liability structure, and manage fees by channel and by type to reduce cost of funds. On the investment side, companies should seek a good balance between assets and liabilities, look for quality assets, and narrow the duration gap. In face of the high homogeneity of life insurance products, companies should launch diversified products with the goal of matching assets and liabilities. Meanwhile, experts pointed out that companies are encountering challenges in the agent transformation process, with a lack of alignment between product complexity and the capability of agents. Therefore, there is a need to intensify efforts in transforming agents into highly qualified professionals.

    In terms of property insurance, experts believed that the rates of some non-auto insurance products continued to fall and the pricing remained inadequate. The liability insurance sector experienced considerable losses, especially in the directors and officers liability insurance sector, where the difficulty in obtaining sufficient information about the insured parties hampers the screening of high-risk customers. Additionally, the pricing of auto insurance product encounters significant challenges, demanding sustained attention to potential risks caused by extreme weather. Small and medium-sized companies had operation difficulties, making it hard for them to replenish capital. As a result, they must undergo strategic transformation towards specialized or differentiated operations. Regarding the issue of high costs for small and medium-sized property insurance companies to adopt the new accounting standard, experts suggested engaging third-party institutions to deliver standardized products or simplified implementation standard. Experts also advised that the industry should expand the independent pricing coefficient for new energy vehicle insurance, and set differentiated regulatory caps on the shares held by quality capital in insurance companies.

    In terms of funds utilization, experts observed that the Chinese economy is speeding up the replacement of the old drivers of growth, posing major challenges for insurance investment in the form of low income and high volatility. To tackle these challenges, it is necessary to consider both the liability and asset sides of the equation. Experts advised that on the liability side, companies should transform toward the customer-centric “insurance products + services” model and actively control cost. On the asset side, first, companies should continue to allocate long-duration assets, prudently use the credit sinking strategy, and strictly prevent credit risk. Second, companies should optimize the internal structure of equity assets and shift to low-volatility products. Third, companies should develop more new products that can meet insurance capital needs based on new forms of financing and revitalize existing assets. Fourth, companies may gradually explore overseas investment, which can help spread risk and increase income. Fifth, companies should implement the requirements of the Ministry of Finance on long-period evaluation of insurance funds, and establish evaluation indicators under the new accounting standard.