Wu
Dingfu: CIRC prepares the risk assets supervision system
Date:
20 Jul, 2006 A
few days ago, Wu Dingfu, president of CIRC, said that CIRC is going to
establish the supervision system of risk-based capital, realize the
transformation from the static supervision based on the business size
to the dynamic supervision based on the risk management.
In
recent years, China insurance industry has preliminarily
established the modern insurance regulatory framework constituted by
market behavior, solvency and corporate governance structure. But Wu
spoke after the end of the national insurance forum that there are
still some prominent contradictions and problems in the development and
supervision of the insurance industry, especially compared to the
requirements of ten measures launched by the government, the gap still
exists. Wu
indicates that some insurance companies¡¯ operating income is low, even
some businesses and companies experience the serious loss and the order
of the insurance market is not fundamentally improved, it is still a
very arduous task to standardize the market order. Many companies are
insolvent, which is closely related to the irregularity of market
behaviors and the imperfection of the governance structure.
Insurance
industry workers believe that if the solvency is not supervised
strictly, it is likely to lead to the short-termism of the operating
behavior, namely to gain the short-term growth of the market share at
the cost of jeopardizing the long-term solvency. Thus, we should
transfer as soon as possible from the strict supervision of market
behaviors to the supervision of solvency, and evaluate dynamically the
risk-based capital of insurance companies.
At
present, RBC monitoring system based on risks has the trend to
replacing gradually the line monitoring system in the international
arena. In many countries where the insurance industry is well
developed, the requirements of the insurance regulatory organizations
for the solvency transfer from the traditional minimum RBC requirements
to the stricter baseline risk capital requirements. For the insurance
companies who underwrite high-risk businesses, they should possess more
capital to meet the requirements of venture capital.
China¡¯s
insurance supervision gives priority to the market conduct supervision.
Although we have invested a great deal of regulatory resources, the
effect is not satisfied. The insurance companies are the internal
reason to determine the market order, only when the internal reason and
the external reason (supervision) play roles together, the
standardization of the market order can achieve more remarkable effect.
(Business News)
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