— The Second Forum of CISF and the Press Release for the 2016 Risk Assessment Report on Chinese Insurance Industry were Held in Beijing
July 6, 2106
The second forum of CISF and the Press Release for the 2016 Risk Assessment Report on Chinese Insurance Industry were held on July 5, 2016 in Beijing. Centering on the "Reform of the Supply Front of the Insurance Industry and Related Risk Management", the Forum discussed major risks faced by the Chinese insurance and identified the countermeasures. The Forum involved three parts: The first was the special report on "Reform on the Supply Front of the Insurance Industry and Related Risk Management". The second was the release of the 2016 Risk Assessment Report on Chinese Insurance Industry. The third was the risk observation (and the 11th meeting of the Risk Assessment Expert Committee) of the insurance industry in the first half of 2016. Mr. Wei Yingning, the former Vice Chairman of CIRC, attended and addressed the Forum. Mr. Ren Jianguo, Chairman of the Board and General Manager of CISFC, delivered a keynote speech. More than 100 guests from regulatory authorities, social organizations, insurance companies and news media attended the Forum.
Mr. Wei Yingning fully affirmed the significance of the Forum, and extolled the achievements made by CISFC in risk resolution and monitoring for the long term. He said that more attention should be paid to the risk resolution and assessment as the Chinese government attached increasingly high importance to the insurance development, and the insurance industry sustained rapid development. Effectively preventing and resolving risks remained the top priority for the insurance development.
As the director member of the Risk Assessment Expert Committee of CISF, Mr. Wei mentioned that risks faced by the Chinese insurance came from three aspects, i.e., property insurance, life insurance and fund employment. Before concluding the speech, Mr. Wei stressed that it was common responsibility of the entire insurance industry to place emphasis on and reinforce the risk management. The top-to-bottom implementation proposed by the regulatory authorities was far from being desired. We must exert forces of the entire industry and make concerted efforts to form more objective and accurate risk monitoring results in a timely manner, thereby serving the sustainable and healthy development of the insurance industry.
During his keynote speech, Mr. Ren Jianguo stated that CISFC had carried out a series of innovative and reform moves since the formulation and implementation of Several Opinions of the State Council on Accelerating the Development of Modern Insurance Industry, which effectively inspired endogenous drive and vigor of the insurance development. The insurance industry presented a new landscape of rapid development, but it also came under increasing risk liability and intensifying risks. Functioning as the last line of defense resolving the industry risk, CISF should continuously adapt to the new situation, study new problems and steadily push the reform and innovation of the supporting system. Firstly, more efforts should be devoted to expedite the reform of fund collection method, and to drive the insurance companies to intensify their self-control over risks by implementing the risk-based premium. Secondly, more efforts should be devoted to detail the scope and standards of remedy of CISF, so as to lay a solid foundation for effective implementation of financial remedy. Thirdly, more efforts shall be devoted to enrich the risk resolution tools and consider setting the market-oriented risk resolution fund, as well as employ quality social capital to provide remedy to the insurance companies incurring difficulty but having a certain value. Fourthly, more efforts should be devoted to explore more diversified risk remedial means and place focus on the study and preparation of financial remedy. In addition, Mr. Ren emphasized that risk monitoring constituted an important part of the risk management mechanism, and was also a fundamental factor of success in or failure of risk resolution. Over the past years, CISFC has worked in the risk monitoring diligently and set up the Risk Assessment Expert Committee, as well as forged the daily monitoring system covering the risk monitoring monthly report, quarterly report and special research report. It also cooperated with CIRC in publishing the China Insurance Consumer Confidence Index (CICCI) of 2015, explored and prepared the Risk Assessment Report on Chinese Insurance Industry since last year, as well as solidified the risk monitoring platform and strove to become the identifier and alarm of the industry risk, so as to escort sound development of the insurance industry.
Furthermore, Mr. Ren Jianguo introduced the assessment on potential risks of the insurance industry as specified in the 2016 Risk Assessment Report on Chinese Insurance Industry. Firstly, the vehicle insurance encounters a fiercer market competition at the early stage of premium reform, and the fee rate rises considerably. Most of medium, small and micro enterprises suffers an underwriting loss of the vehicle insurance. Secondly, the non-vehicle insurance incurs a certain decline in premium adequacy and wide fluctuations in underwriting due to the downside macroeconomy. Thirdly, major channels of the life insurance incur the hazards to varying degrees, and the personal agents should be regulated amid robust development. Some companies face challenges from the one-off banking-insurance payment. Fourthly, the cash flow management becomes tougher. The massive sales of products with short and medium duration over the past years will result in the cash outflow in the future, and the non-life investment-linked products will face the concentrated payment. Fifthly, the insurance fund employment comes under increasing credit risk. Sixthly, mismatch between assets and liabilities becomes more prominent, which is further intensified by low-interest rate, soaring premium, high-cost acquisition of insurance policy and tough requirements of yield rate. Eighthly, the internet insurance also challenges the insurance industry.
Looking ahead the future risk monitoring of CISF, Mr. Ren asked that more efforts should be dedicated to improve the functions of the Risk Assessment Expert Committee, introduce the best talent by replenishing and optimizing the expert members and hold the regular communication in the form of "Hundred Experts Forum of Insurance Risk Management" to provide suggestions and solutions for risk monitoring and assessment of the insurance industry. Great efforts should be spared to make the annual insurance risk assessment report become the hit product of CISFC for risk monitoring, and reinforce the warning of potential risks and monitoring over key insurance companies, so as to become the identifier and alarm of the industry risk.
Other attendees at the workshop included Mr. Xu Longyan, the Compliance Department of CIRC, Mr. Jiang Zheng, Associate Professor of Central University of Finance and Economics, Ms. Liu Tian, staff of Zhongzheng Zhixin (Beijing) Economic Consulting Co., Ltd., heads of all departments and other executives of CISFC.
At the Forum, Mr. Ji Min, Deputy Director-General of Financial Research Institute of the People's Bank of China ("PBC") , delivered a special report entitled Several Viewpoints on the Chinese Debt Risk. Mr. Wang He, Executive Vice President of PICC Property and Casualty Co., Ltd., made a special report entitled Insight into the Insurance Industry— Not Only the Essence of Risk. Mr. Hao Yansu, Secretary-General of China National Master of Insurance Education Supervisory Committee, Professor and PhD supervisor of Central University of Finance and Economics, delivered a featured report entitled Risks Faced by the Insurance Industry during the Transformation of the Chinese Economy. Three guests shared their viewpoints on the reform of the supply front and the insurance risk management.
Before concluding the Forum, CISFC delivered a special report on risk observation of the insurance industry in the first half of 2016. Three expert members, i.e., Mr. Chen Xinli, Mr. Yu Shenghao and Mr. Meng Sen, of the Risk Assessment Expert Committee, expatiated on the current risks faced by the insurance industry based on their respective viewpoints.