The China Banking and Insurance Regulatory Commission (CBIRC) has proposed a number of revisions to its reinsurance regulatory regime, which aim to strengthen risk management functions, improve risk prevention and control, and promote the further development of the market.
A spokesperson for the regulator explained that there will be eight main strands to the revisions, which have been formulated in consultation with the industry.
Since being introduced in 2005, the current set of reinsurance regulations have played an important role in the development of the market, but both the regulator and re/insurers now feel that changes must be made for the rules to keep pace with the evolution of the market.
The first of the proposed changes would aim to strengthen the top-level strategic management of reinsurance, requiring insurance companies to formulate reinsurance strategies and clarify relevant content and implementation mechanisms.
Next, revisions would target improvements to the supervision of the safety of reinsurance business, strengthen the management requirements for reinsurance business concentration, and increase overseas reinsurance business risk monitoring, as well as liquidity management requirements.
Further changes concern the supervision of reinsurance contract management, including an emphasis on more timely signings of reinsurance contract documents, timely settlements of reinsurance funds and reporting of receivables and payables, in addition to strengthening file management requirements.
Another proposal would improve the management of direct insurance companies to carry out the inward business, CBIRC said, clarify the definition of the difference between temporary reinsurance and contract reinsurance, and strengthen the qualifications for direct insurance companies to carry out reinsurance inward business.
On the broking side, requirements could be increased for the prudent selection of reinsurance brokers, as well as tougher standardization requirements for the information disclosure of brokers and the performance of contract responsibilities.
Furthermore, restrictive clauses for insured’s affiliated enterprises are set to be deleted, and the regulator is aiming to streamline information reporting tasks, unify reporting time, and delete unnecessary reporting tasks.
