China issues rules on insurance assets & liabilities management

Move is part of regulator’s campaign to discourage risky investment practices

China issues rules on insurance assets & liabilities management

Insurance News

By Gabriel Olano

China’s banking and insurance regulator has issued interim measures aiming to strengthen management and supervision of insurance assets and liabilities.

The rules were published by the China Banking and Insurance Regulatory Commission (CBIRC) on its website on Thursday, state media arm Xinhua reported.

Under risk preferences and other constraints, insurance companies will be mandated to continuously formulate, execute, monitor and improve relevant strategies for assets and liabilities. Furthermore, the CBIRC will set up a regular analysis mechanism for asset-liability management supervision, as well as enforce various differential supervision policies and measures, which are based on verified evaluation results.

The banking and insurance regulator said that enforcing these interim measures will help insurers to improve their ability in asset-liability management, and minimise the occurrences of asset-liability mismatch. Prudent asset allocation, it said, will promote high-quality development of the insurance industry.

China’s insurance sector has been battling asset-liability mismatch for several years, especially due to risky investment practices by insurers during the booming years of economic development. In 2017, the CBIRC’s predecessor said that there are “major conflicts” between volatile investment incomes and stable liability costs, making it hard for the industry to match its assets and liabilities.

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