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China needs to build an insurance regulatory regime that is in line with international best practices, senior insurance regulators said Monday.
Reforms would promote growth of the local insurance industry in an increasingly internationalized and competitive environment, they explained.
According to delegates at the China Insurance Regulatory Commission (CIRC) sponsored China International Insurance Forum, regulators need to tap into the expertise and experience of their foreign counterparts, particularly at a time when globalization and technological advances are complicating supervisory issues.
Good solvency monitoring, information disclosure, and efficient supervision of the market conduct of insurers, are all required, according to Diane Koken, president of the National Association of Insurance Commissioners in the United States. "What insurance companies sell is not just insurance contracts, but promises," she added. "You need to protect the consumers."
To be able to identify potential problems, insurance regulators also need to have a reporting system to collect key data from insurers, said Kurt Schneiter, chairman of the Insurance and Private Pensions Committee of the Organization for Economic Co-operation and Development.
Koken and Schneiter are among many participants at the forum who will also attend four days of committee meetings of the International Association of Insurance Supervisors, which start today in Beijing, to discuss common regulatory issues.
Over the past 20 years, China's insurance market has shown an impressive average 30 per cent annual growth , but irregularities, particularly by unqualified insurance agents who may mislead policy holders, have somewhat tarnished the reputation of the industry, their conduct sparking intensified calls to better protect the interests of consumers.
While the CIRC strives to strengthen supervision of insurer conduct, Wu Dingfu, chairman of CIRC, said his commission also aims to make solvency supervision and corporate governance supervision pillars of the modern supervision system that is currently under construction.
To protect policy holders, the CIRC has increasingly been paying attention to monitoring the solvency margin of insurers.
The policy shift is being welcomed by local insurers. Wang Xianzhang, president of China Life (Group), said focusing on solvency supervision is in line with international trends, and will help promote the development of the Chinese insurance industry by giving more freedom to insurance companies and efficiently concentrating regulatory resources. Insurance regulators from 14 Asian countries and regions also passed a Beijing Declaration Monday, where they agreed to enhance cooperation and strengthen efforts to promote growth of Asian insurance markets.
(China Daily May 24, 2005)
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