01/27/2021 | Press release | Distributed by Public on 01/27/2021 08:39
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JANUARY 27, 2021 09:20 AM (EST)
Best's Commentary: Revised Solvency Management Rules Should Strengthen China's Insurance Industry
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FOR IMMEDIATE RELEASE
HONG KONG - JANUARY 27, 2021 09:20 AM (EST)
AM Best views the announced changes tothe solvency management of China's insurance sector as a positive step, particularly in the reinforcement of balance sheet strength and the development of enterprise risk management.
The China Banking and Insurance Regulatory Commission (CBIRC) announced that the changes will go into effect 1 March 2021. In its new Best's Commentary, 'China Revises Solvency Management Rules to Strengthen Industry Capitalisation,' AM Best notes that the revised rules will also form the foundation for the regulator's upcoming release of technical adjustments to insurers' solvency calculation as part of the wider China Risk-Oriented Solvency System Phase II implementation.
With the updated regulations, the CBIRC has defined the accountability of insurance companies' directors and senior executives toward their companies' capital management practices. The regulations also require companies to form three-year rolling capital plans and perform stress tests, as well as regularly disclose solvency information. These measures will allow for more dynamic and timely monitoring of insurers' solvency health. Insurance groups, captive insurers, mutual companies and onshore branches of foreign insurance companies also are subject to the updated capital management regulations.
To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=305399 .
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.