——CISFC held the 13th Meeting of the Risk Assessment Expert Committee for Insurance Industry
April 13, 2017
The 13th meeting of the Risk Assessment Expert Committee for Insurance Industry of CISFC was held in Beijing on April 11 and 12, 2017. The Meeting reviewed the overall operating situation of 2016 and the performance of ‘good start’ of 2017 of the insurance industry, and discussed current critical risk issues, as well as researched and predicted the insurance risk profile in the whole year of 2017. Moreover, experts attending the Meeting made special analysis and discussion of the cash flow risk arising from the business transformation of the life insurance company, risks relating to the guarantee insurance of the property companies, the impact of bonds market on the employment of insurance capital and other hotspot issues.
The property insurance companies recorded the original premium income of RMB926.617 billion in 2016, an increase of 10.01% year on year, this figure was RMB2,169.281 billion for the life insurance companies, jumping by 36.78% year on year. The premium income from the investment of the policyholders and independent accounts that was not included into the insurance contract of life insurance companies increased by RMB1,279.913 billion in the year, soaring by 53.86% year on year. Up to February 2017, the property insurance companies recorded the original premium income of RMB165.44 billion, an increase of 10.35% year on year, this figure was RMB1,024.84 billion for the life insurance companies, jumping by 35.41% year on year. The premium income from the investment of the policyholders and independent accounts that were not included into the insurance contract of life insurance companies increased by RMB1,65.324 billion, declining by 61.36% compared with the same period of last year. By the end of February, the total assets of the insurance industry were RMB15.96 trillion, an increase of 5.56% over the beginning of the year.
Experts think that radical behaviors of some insurers and some risk events have caused social concern since the previous year, and brought up queries from the media and social public about insurance products and employment of the insurance capital, which delivered relatively great negative influence on the insurance industry. The Meeting identified some risk points requiring great attention amid the current complex situation. Specifically:
Regarding the life insurance, benefiting from continuous promulgation of series policies for structural adjustment, the guarantee-based business saw rapid growth, the investment-oriented business witnessed significant adjustment and the business structure received continuous optimization, the regulatory policies initially produced good effects. The cash flow risk of life insurance is controllable in the short term. However, the life insurance comes under mounting pressure from payment upon maturity and surrendering of policies. The banking-insurance channel and the lump-sum collection take a large proportion, making the insurers with aggressive assets allocation vulnerable to the cash flow risk. Therefore, the share of new business could probably shrink in case of any change in external environment. Worse, these insurers may need to realize assets if the investment term of assets suffers a mismatch. Therefore, experts suggest strengthening strategic management, increasing stress test and developing emergency plans. Meanwhile, great attention shall be paid to the insurance companies with high reputational risk and corporate governance risk.
Regarding the property insurance, the business size sustains the growth and the industry possesses sufficient capital. Currently, medium and small property insurers suffer a hard time, since it is difficult to earn money from the vehicle insurance business and to push ahead with distinctive business. Profits of the vehicle insurance are offset against high expenses. The operating efficiency needs to be further increased. Experts suggest continuing to push the reform of premium rate of commercial car, further removing constraints on products and premium rate, and improving regulatory means. Besides, the property insurance faces a heap of challenges in terms of non-vehicle insurance: Amid increasing credit default, insurers need to keep alert for the transmission of cross-industry risk from the guarantee insurance business. Experts suggest making active efforts to promote the small-amount and dispersed business and performing penetrating risk management. The agricultural insurance suffers prominent default risk, and some insurers that own relatively large proportion of the non-life investment-linked products could probably face the liquidity risk.
Leaders of relevant departments of CIRC and PBC and more than 20 experts and scholars from CISFC, insurance companies, insurance asset management companies, consulting agencies, colleges and universities and research institutes attended the meeting. Since its establishment in May 2013, the Risk Assessment Expert Committee for Insurance Industry of CISFC has organized and held 33 expert meetings.