The 4th Insurance Security Fund Forum Held in Beijing
October 15, 2018
On October 15, 2018, the 4th Insurance Security Fund Forum, themed “Guard Insurance Origin and Strengthen Risk Prevention,” was held by China Insurance Security Fund Co., Ltd. (CISFC) in Beijing. At the event, insurance experts delivered reports on the state and development of China’s insurance industry, the establishment of various internal mechanisms within insurers, and the control and prevention of industry risks, among others. Wei Yingning, Vice Chairman of the then China Insurance Regulatory Commission and the founding Chairman of CISFC, gave the opening speech. CISFC Chairwoman and General Manager Yu Hua, who also serves as the Secretary of the Party Committee, delivered the keynote speech at the event.
Wei recognized the particular significance of this year’s forum, believing that the insurance industry, a special trade that both deal in and manage risks, must anchor all its activities on risk management, whether it is to support the real economy, build social safety net, or achieve sustainable development.
“On the whole, the insurance industry is starting to see the positive effects of its risk control measures, but the risk situation remains challenging and the campaign on risk prevention is still ongoing.” Wei then emphasized that the insurance security fund system, designed as a key buttress and buffer of industry risks, has been instrumental in this task by helping enhance insurance regulation and complement regulatory measures.
“The past decade since the establishment of CIFSC in 2008 has shown that, the corporatization and market-driven management of the Insurance Security Fund – which has led to an efficient framework for collecting, managing, and employing the fund – have helped the industry explore market-based solutions to risk management and market exit mechanisms, preserved and enhanced the value of the fund, raised the level of expertise by which the fund engages in the management and resolution of industry risks, and improved the fund’s capacity to contribute to industry remedies and insurance protection,” said Wei, who then suggested to CISFC to bring greater innovation into the insurance security fund system, including (1) optimizing the fund’s contribution model by incorporating risk-based contribution rates; (2) exploring diversified risk relief approaches such as liquidity relief and financial relief; and (3) enhancing the system’s risk monitoring capabilities.
Yu remarked that China’s insurance security fund system has its roots in the Insurance Law which was enacted in 1995. Over the past 23 years, the Insurance Security Fund has been growing and is playing an increasingly vital role in industry development and insurance consumer protection. She stressed that over its decade-long history, CISFC has been firmly committed to “supporting insurance regulators, promoting industry development, and serving insurance consumers.”
Making protecting the rights and interests of insurance consumers one of its core missions, CISFC has implemented a four-pronged development strategy to improve fund management, risk monitoring, and risk resolution, as well as to expand related services. Specifically, the company has been striving to (1) collect and manage contributions according to law to make the Insurance Security Fund more effective at stabilizing and promoting industry development; (2) improve the institutional mechanisms of risk resolution to help insurers reduce and recover from risks; (3) duly monitor industry risks to identify and provide early warning on industry risks, with notable success; and (4) actively promote the joint development of the insurance security fund system and the insurance industry, by taking a long-term and broad perspective.
Yu added that CISFC will seek greater reform and innovation of the insurance security fund system by advancing the contribution rate reform and building an emergency fundraising mechanism, actively integrating with the risk monitoring system of regulators to improve the system’s risk identification capabilities, and diversifying risk resolution approaches for greater efficiency.
At the forum, Dr. Zhao Yulong, Director of the Finance and Accounting Department of the China Banking and Insurance Regulatory Commission, Professor Zheng Wei of Peking University, Deputy Secretary Huang Baoxin of the CPC Ping An Group Committee, President John Donghui Chen of Swiss Re China, Managing Director Kevin Bogardus of Chubb Insurance China, and Bo Huang, Partner at KPMG Advisory China, delivered reports on a wide range of topics, including developments in the insurance industry, building of the C-ROSS framework, risk culture and risk control practices of insurers, and creation of an emergency fundraising channel for the Insurance Security Fund. More than 140 guests from regulatory authorities, insurers, peer institutions, and news media attended the forum. The event was covered by mainstream media including the People’s Daily Online and Xinhua News Agency.