CISFC Holds the 24th Meeting of the Risk Assessment Expert Committee for Insurance Industry
The 24th meeting of the Risk Assessment Expert Committee for Insurance Industry was held by CISFC online from January 13 to 14, 2022. The meeting consists of three sessions on the theme of property insurance, life insurance, and insurance funds investment, respectively. More than 40 experts and researchers from insurance companies, insurance asset management companies, and research institutions exchanged views on the market situation and risks facing the insurance industry.
In the property insurance segment, though significant achievements were seen in the reform of auto insurance, further efforts are needed toward the liberalization of products and premium rates, and there still existed deviation between the pricing of certain products and their actual situation. Specifically, the exclusive new energy auto insurance products extended coverage to risks from the EIC system (battery, motor and electric control systems) and multiple application scenarios, bringing more operational challenges to insurance companies. On the other hand, insurers of non-auto insurances, as pointed out by the experts, should stay rational and further strengthen insurance services, risk control and accident prevention while avoiding price war. In addition, insurers should pay continuous attention to climate change risks, emerging risks and imported risks to improve risk pricing capabilities.
In the life insurance segment, several issues faced the insurers: (1) the growth of instalment premiums of new policies missed forecasts, with a declined quality of policies; (2) the sales generated by insurance agents has shrunk due to the loss of salespersons; (3) new regulations on bancassurance imposed pressure on its future development; (4) in new critical illness insurance products, the growth of claim payment outpaced that of revenue, indicating operational pressure in the futures; and (5) intensifying downtrend risk of interest rates over the long term led to loss from interest rate difference of products with high guaranteed interest rates. In addition, liquidity risk of small and medium-sized life insurance companies required continuous attention of the market.
In terms of insurance funds investment, both risks and challenges increased as the insurance industry is in a complex situation characterized by the painful business transformation, downward trending of insurance investment proceeds, and implementation of the China Risk-Oriented Solvency System (C-ROSS) Phase II and the new accounting standards. As the experts viewed, Fed’s stringent policies has brought liquidity shock to the global capital market; the dip in medium- and long-term interest rates has aggravated the risk of loss from interest rate difference and reinvestment risk due to; and the risks in the real estate have led to credit risk transmission and the decline of collateral value caused by real estate risks. These, among others, deserve the attention of the insurers. Experts also stressed that insurance asset managers should fully tap into the opportunities of ESG sustainable investment.