China’s insurance sector improving its risk management, says AIA CEO

China’s insurance sector improving its risk management, says AIA CEO

China’s insurance sector improving its risk management, says AIA CEO The Chinese insurance sector’s implementation of a risk-based solvency system and extensive reforms of the bond market will help boost Shanghai’s reputation as a global insurance hub, according to AIA Group CEO Mark Tucker.
 
“The newly implemented Chinese risk-oriented solvency system achieves a focus on risks, the quality of being international, and the ability to support market orders,” said Tucker. “It has been the most significant and necessary of the reforms put in place.”
 
The new solvency system, named C-ROSS, was introduced this year and assesses insurers’ solvency based on risks and not by the volume of business. The new system lays down minimum capital requirements based on insurance risks, market risks and credit risks. It also provides measures to improve insurers’ internal management of capital and liabilities.
 
By the end of March, two of the 73 life insurers in China have reported negative solvency rates. Three are approaching the regulatory requirement of 100%.
 
Tucker added that the new system is more risk-oriented market-based, and internationally applicable. Unlike the old system, it also discriminates less against foreign insurance companies.
 
He also mentioned that bond market reforms will help make Shanghai establish itself as an international financial center.
 
“I think the opening up of the bond market to find investors, the Hong Kong-Shanghai Connect, the opening up of the free-trade zone, all of these are very positive steps. These are indications of the direction and significance that Shanghai will continue to focus on the financial side,” he said.
 

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