China’s insurance regulator has released draft rules for supervising insurers’ management of their assets and liabilities.

The regulations, which will be implemented next year, intend to make sure the insurance industry continues its “steady development”, while preventing “systemic risks in an increasingly complicated” environment, Reuters reported.

The rules proposed by the China Insurance Regulatory Commission (CIRC) include a grading system to designate the level of investment and fundraising an insurer can make. The regulator said in an online statement that it will conduct spot checks and have third-party assessments to assess the capabilities of insurers to manage assets and liabilities, based on cash flow and cost matching.

The grading system will rank insurers from A to D. Those in the lowest rating of D run the risk of having their business activities restricted, and their investment actions will be extremely limited. They may also be banned from issuing new products.

Chinese branches of foreign-owned insurers will also be subject to the new rules, the CIRC said.

The move comes after China initiated an industry-wide crackdown on risky activities by insurers, which exposed the system to risk, caused liquidity issues, and jeopardised their policyholders’.


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