Chinese insurers have trouble matching premiums and investments, says PwC

Survey reveals that many insurers in Asia’s largest market are inadequately equipped in risk monitoring

Chinese insurers have trouble matching premiums and investments, says PwC

Insurance News

By Gabriel Olano

A large proportion of Chinese insurers have yet to develop or use tools that can properly match their assets and liabilities, or investments and premiums, as part of a risk-oriented solvency system, according to a report by PwC.

The study by the global accounting firm revealed that only 13% of respondents were able to accurately match premium growth with investments, which is a critical aspect in monitoring an insurer’s solvency levels.

A total of 107 insurers in mainland China were polled between March and May of this year with regard to how these firms cope with the risk-oriented solvency supervision framework, which was introduced by the China Insurance Regulatory Commission (CIRC) in 2016. The survey included insurers in the life, property and casualty, reinsurance, pension, and health segments.

The survey further found that around 12% of insurers had already set up the infrastructure, but have yet to apply it in their day-to-day business. Meanwhile, 47%, or close to half, of the insurers surveyed said they had not developed any methods at all.

According to PwC, risk-oriented solvency supervision systems should now be indispensable tools in business planning and the operations of all insurers.

“Insurers have attached growing importance to investment risk and asset/liability management against the new regulatory environment,” PwC said in the report. “Yet they are still falling short of establishing the management means, models, technologies and tolls needed to handle the issue.”

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