State Council: Support the development of floating income insurance, strictly regulate the continuous supervision of insurance institutions

On Wednesday, September 11th, the State Council issued the "Several Opinions on Strengthening Supervision, Preventing Risks, and Promoting the High-Quality Development of the Insurance Industry," with the following key points:

• Give full play to the long-term investment advantages of insurance funds. Cultivate true patient capital, promote the benign circulation of funds, capital, and assets. Increase investment in strategic emerging industries, advanced manufacturing, new types of infrastructure, and other areas to serve the development of new productive forces. Focus on national major strategies and key areas, serve technological innovation and the construction of a modern industrial system. Guide insurance funds to support technological innovation, venture capital, rural revitalization, and the development of green and low-carbon industries. Enrich the forms of catastrophe insurance protection, actively develop the third pillar of pension insurance, expand health insurance coverage, and improve the universal insurance system .
• Focus on commercial insurance for new energy vehicles and deepen the comprehensive reform of vehicle insurance. Develop multi-level agricultural insurance, promote the expansion, improvement, and standardization of agricultural insurance, and promptly regulate claims. Explore innovations in liability insurance and household property insurance. Leverage life insurance for family protection and wealth inheritance functions. Steadily carry out domestic and foreign currency policy business. Improve the product pricing mechanism, strengthen the application of actuarial techniques. Promote product transformation and upgrading, and support the development of floating income insurance.
• Support high-quality overseas insurance institutions to establish legal entities and branches in China, support qualified overseas institutions to invest in domestic insurance institutions. Encourage Chinese insurance institutions to steadily expand overseas business, continuously enhance operational management and risk prevention capabilities. Deepen international insurance regulatory exchange and cooperation, actively participate in international insurance governance.
• Strictly control the access to the insurance market. Strictly supervise insurance institutions continuously, crack down on illegal and irregular insurance activities, and effectively prevent and resolve risks in the insurance industry.
• Enhance the quality and efficiency of insurance services to the real economy. Improve the development level of agricultural insurance and rural infrastructure insurance. Accelerate the development of marine insurance and enhance maritime security capabilities. Research and explore international road transport risk diversification mechanisms. Expand the coverage of export credit insurance to help cultivate new momentum for foreign trade.

The full text is as follows:

Several Opinions of the State Council on Strengthening Supervision, Preventing Risks, and Promoting the High-Quality Development of the Insurance Industry

State Council Document No. 21, 2024

People's Governments of Provinces, Autonomous Regions, and Municipalities directly under the Central Government, Ministries and Commissions of the State Council:

Since the 18th National Congress of the Communist Party of China, the insurance industry in our country has developed rapidly and played an important role in ensuring and improving people's livelihoods, disaster prevention and mitigation, and serving the real economy. In order to thoroughly implement the spirit of the Central Financial Work Conference and further promote the high-quality development of the insurance industry, the following opinions are now proposed.

I. General Requirements

Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 19th National Congress of the Communist Party of China and the 2nd and 3rd Plenary Sessions of the 20th Central Committee, comprehensively implement the new development concept accurately and completely, adhere to the political and people-centered nature of financial work, take strong supervision, risk prevention, and promotion of high-quality development as the main line, give full play to the economic shock absorber and social stabilizer functions of the insurance industry, vigorously enhance insurance protection capabilities and service levels, promote the construction of a strong financial country, and serve the overall situation of China's modernization with Chinese characteristics Grasp the main connotations of the high-quality development of the insurance industry, firmly establish the concept of prioritizing services, help build a strong economic security net, social security net, and disaster prevention and control net. It is necessary to adhere to the centralized and unified leadership of the Party Central Committee on financial work, resolutely follow the path of financial development with Chinese characteristics, ensure that the insurance industry always maintains the correct development direction; it is necessary to adhere to the people-centered position, firmly establish the development ideology centered on the people, focus on the main business, protect the legitimate rights and interests of consumers, better meet the increasing insurance protection and wealth management needs of the people; it is necessary to adhere to strict supervision, ensure that supervision is "sharp and thorny", with edges and corners, achieve full coverage of supervision without exceptions, and firmly hold the bottom line of preventing systemic risks; it is necessary to adhere to deepening reforms, carry out five major tasks in technology finance, green finance, inclusive finance, pension finance, and digital finance, coordinate openness and security, and improve the quality and efficiency of insurance services to the real economy.

By 2029, a high-quality development framework for the insurance industry will be initially formed, with steadily expanding coverage, increasingly comprehensive protection, continuously improving services, balanced and robust asset allocation, sufficient solvency, and sound and effective governance and internal control. The insurance regulatory system will be more sound, and regulatory capabilities and effectiveness will be greatly enhanced. By 2035, a new landscape of the insurance industry will be basically formed, with a complete market system, rich and diverse products and services, scientific and effective regulation, and strong international competitiveness.

II. Strictly Control the Access to the Insurance Market

Strictly approve insurance institutions. Strictly approve the establishment of new insurance institutions in accordance with the law. Optimize the regional and hierarchical layout of institutions, steadily and orderly reduce quantity and improve quality. Promote hierarchical management of business.

Strictly review the qualifications of management personnel. Improve the qualification review mechanism for directors, supervisors, and senior management personnel of insurance institutions. Strengthen the supervision of the duties of chairpersons and general managers. Establish a negative information database for key personnel appointments and duties, increase accountability for dereliction of duty, and prevent "sick personnel flow".

Strictly review shareholder qualifications. Improve the rules for equity management of insurance companies. Conduct thorough examinations of shareholder qualifications, funding sources, and behaviors. Prohibit enterprises with violations such as cross-industry operations, excessively high leverage ratios, serious dishonest behaviors, and major violations of laws and regulations from becoming major shareholders or actual controllers of insurance institutions. Establish a "blacklist" system for shareholders and actual controllers, and increase efforts to remove major shareholders with serious violations of laws and regulations.

III. Strict and Continuous Supervision of Insurance Institutions

Enhance corporate governance supervision. Promote the organic integration of Party leadership and corporate governance. Improve internal control compliance and risk management systems. Strictly supervise related-party transactions. Strictly supervise consolidated financial statements. Improve incentive and restraint mechanisms for key personnel, and strengthen long-term assessments.

Enhance asset-liability linkage supervision. Improve interest rate transmission and liability cost adjustment mechanisms. Guide the optimization of asset allocation structures, enhance cross-market and cross-cycle investment management capabilities. Urge the clarification of responsibilities between principals and trustees. Strengthen supervision throughout the investment process. Legally and compliantly use financial derivatives. Prudently promote global asset allocation.

Enhance hierarchical and classified supervision. Improve the rating system for insurance institutions, and strengthen the application of rating results. Promote hierarchical management of insurance sales personnel. Strengthen supervision of product fee differentials. Reasonably allocate regulatory resources, implement high-intensity supervision for high risks and low-intensity supervision for low risks. Guard against regulatory arbitrage and regulatory vacuums Enhance the protection of insurance consumers' rights. Deepen the construction of the credit system in the insurance industry. Strengthen product suitability supervision, enhance the adaptability of product supply and demand. Strengthen the protection of customer information security. Strengthen governance at the source, optimize underwriting and claims services. Strengthen publicity and promotion, enhance the overall insurance awareness in society. Guide insurance institutions to effectively maintain industry reputation.

IV. Seriously rectify illegal and irregular activities in the insurance sector

Focus on key areas and weak links. Increase inspection efforts, resolutely crack down on key issues, key individuals, and key behaviors that seriously disrupt market order, seriously harm the legitimate rights and interests of insurance consumers, and have a negative social impact. Establish a system for recovering improper gains by shareholders and a post-risk liability recovery mechanism. For key personnel engaged in embezzlement, collusion, and benefit transfer, strict measures such as disqualification, salary recovery, and industry bans will be implemented; those suspected of crimes will be transferred to judicial authorities for handling.

Intensify market regulation efforts. Strictly crack down on violations such as improper shareholding by shareholders or actual controllers, non-self-owned capital contributions, improper intervention in company management activities, and unauthorized use of funds. Prohibit investments in industries unrelated to the insurance core business. Regulate sales practices and strictly investigate misleading sales and fee extraction. Crack down on insurance fraud, unauthorized agency cancellations, and other violations.

Optimize the administrative penalty mechanism. Refine the standards for penalties for various illegal activities. Strictly implement a comprehensive penalty system, combining fines and confiscation. Adhere to the principles of consistent penalties for similar cases and proportionate penalties, improving the accuracy of penalties. Promote standardized penalty procedures.

V. Effectively prevent and resolve risks in the insurance industry in a strong, orderly manner

Establish a risk-based regulatory system. Improve the classification system for insurance asset risks. Strengthen countercyclical regulation. Optimize solvency and reserve supervision policies. Develop risk disposal procedures. Improve the mechanism for insurance protection fund participation in risk disposal. Standardize insurance product design and rights and obligations of stakeholders, and research and improve policy redemption mechanisms linked to risks.

Continuously prevent and resolve potential and emerging risks. Improve the risk early warning system, clarify responsibilities for early warning response. Strengthen risk monitoring and analysis, track and assess risks in key areas. Enhance duration and interest rate risk management. Establish a hard constraint system for early risk correction.

Prudently advance risk disposal. Expand sources of risk disposal funds, support eligible enterprises to participate in the reform of insurance institutions. Improve market exit mechanisms. For insurance institutions with high risks and no sustainable operating capacity, revoke financial licenses and enter bankruptcy liquidation procedures in accordance with the law. Implement local party committees and government responsibilities for risk disposal, strengthen the supervision responsibilities of central financial management departments, and coordinate risk disposal efforts.

VI. Enhance the level of insurance services for people's livelihood protection

Enrich the forms of catastrophic insurance protection. Adhere to the principle of government promotion and market operation, explore the establishment of a multi-channel and multi-level catastrophic insurance protection mechanism. Expand the scope of catastrophic insurance protection. Expand comprehensive catastrophic insurance pilots. Research and apply catastrophic risk models. Explore catastrophic bonds. Reasonably use reinsurance to diversify risks. Develop climate insurance. Improve emergency insurance services, enhance risk reduction services, support disaster prevention, reduction, and relief efforts Actively develop the third pillar of pension insurance. Vigorously develop commercial insurance annuities to meet the diverse pension security and intertemporal financial planning needs of the people. Encourage the development of new products and exclusive products tailored to individual pension systems. Support pension insurance companies in conducting commercial pension business. Promote the development of exclusive commercial pension insurance. Enrich insurance products, services, and insurance fund support methods that are compatible with the silver economy. Promote the coordinated development of the insurance industry and the elderly care service industry in accordance with laws and regulations.

Enhance the level of health insurance service protection. Expand the coverage of health insurance. Enrich the forms of commercial medical insurance products and promote rapid settlement of medical expenses. Include new medical technologies, new drugs, and new equipment applications in the coverage scope. Develop commercial long-term care insurance. Continuously provide good service protection for major illness insurance. Promote deep integration of commercial health insurance and health management. Encourage the provision of insurance products for the elderly, chronic disease patients, and other groups. Pilot the regional insurance and medical device catalog. Explore the establishment of a "blacklist" system for third-party service agencies.

Improve the inclusive insurance system. Achieve the expansion and improvement of basic insurance services. Expand the coverage, scope, and target groups of insurance services, and strive to provide the people with insurance services that are widely covered, fair, affordable, and effective. Better meet the insurance needs of farmers, low-income urban residents, and other groups. Optimize the supply of insurance protection for new formats and new urban residents. Promote accident insurance vigorously. Encourage the development of exclusive inclusive insurance. Improve inclusive insurance evaluation indicators.

7. Enhance the quality and efficiency of insurance services for the real economy

Focus on national major strategies and key areas. Actively connect with the risk protection and financing needs of national major strategies, key areas, and weak links such as the high-quality construction of the "Belt and Road" initiative. Explore providing a package of risk management and financial service solutions to facilitate the smooth operation of the domestic and international dual circulation. Play the role of co-insurance bodies to serve national key support areas.

Serve technological innovation and the construction of a modern industrial system. Improve the insurance products and service system that covers the entire life cycle of technology companies. Strengthen the top-level design of green insurance. Enhance the development level of agricultural insurance and rural infrastructure insurance. Accelerate the development of marine insurance and enhance maritime security capabilities. Research and explore international road transport risk diversification mechanisms. Expand the coverage of export credit insurance to help cultivate new momentum in foreign trade.

Utilize the long-term investment advantages of insurance funds. Cultivate genuine patient capital, promote the benign circulation of funds, capital, and assets. Increase investment in strategic emerging industries, advanced manufacturing, new types of infrastructure, and other areas to serve the development of new quality production forces. Guide insurance funds to support technological innovation, venture capital investment, rural revitalization, and the development of green and low-carbon industries.

8. Deepen reform and opening up of the insurance industry

Continuously improve the insurance market system. Support large insurance institutions to become stronger and better. Guide small and medium-sized insurance companies to develop specialized operations with distinctive features. Enhance the long-term fund management capabilities of insurance asset management companies. Promote the standardized and high-quality development of insurance intermediary institutions. Encourage reinsurance companies to increase innovation in products, services, and technology. Play the role of insurance industry organizations and infrastructure.**

Continuously deepen reforms in key areas. Improve the product pricing mechanism and strengthen the application of actuarial techniques. Promote product transformation and upgrading, and support the development of floating income insurance. Focus on commercial insurance for new energy vehicles and deepen comprehensive reform of vehicle insurance. Developing multi-level agricultural insurance, promoting the expansion, improvement, and standardization of agricultural insurance, and timely regulating claims. Exploring innovation in liability insurance and household property insurance. Leveraging life insurance for family protection and wealth inheritance. Accelerating marketing system reform. Steadily conducting domestic and foreign currency policy business.

Continuously advancing high-level opening-up. Supporting high-quality overseas insurance institutions to establish legal entities and branches in China. Supporting qualified overseas institutions to invest in domestic insurance institutions. Encouraging Chinese insurance institutions to steadily expand overseas business, continuously enhancing operational management and risk prevention capabilities. Deepening international insurance regulatory exchange and cooperation, actively participating in international insurance governance.

Enhancing the sustainable development capabilities of the insurance industry.

Improving the accuracy of product pricing. Strengthening basic data governance and standardization in the insurance industry, promoting data sharing with related industries. Exploring the interaction of medical security information platforms with commercial health insurance information platforms. Developing statistical standards for commercial pension insurance. Improving the health insurance data index system. Compiling and improving experience rate tables.

Enhancing digital intelligence. Accelerating digital transformation, increasing resource input, improving operational management efficiency. Encouraging the use of technologies such as artificial intelligence and big data to enhance marketing services, risk management, and investment management capabilities. Strengthening network security protection and data security management, enhancing emergency response and disaster recovery capabilities. Safeguarding data assets in accordance with laws and regulations.

Enhancing the intrinsic driving force for high-quality development. Actively cultivating a distinctive Chinese insurance culture, shaping a trustworthy, reliable, and warm image of the insurance industry. Establishing the correct business, performance, and risk perspectives, accelerating the transition from pursuing speed and scale to focusing on value and benefits. Strengthening the construction of professional talent teams. Improving operational efficiency, enhancing internal capital replenishment capabilities. Expanding capital replenishment channels, improving capital replenishment regulatory systems. Increasing debt capital replenishment tools.

Strengthening the coordination of policies to promote high-quality development of the insurance industry.

Improving the central-local coordination mechanism. Formulating a list of central-local coordination matters, clarifying work processes. Establishing systems for regular reporting, information sharing, and consultation on major issues between financial regulatory departments and local financial management departments. Continuously cracking down on illegal insurance activities. Enhancing the effectiveness of regulatory coordination.

Strengthening macro policy coordination. Improving the financial support mechanism for agricultural insurance against major disaster risks. Reasonably arranging central and provincial financial subsidies for major grain crops and local specialty agricultural products. Strengthening the legal construction in the liability insurance field. Establishing a technology insurance policy system, encouraging innovative explorations tailored to local conditions. State-owned units that comply with regulations may use fiscal funds to purchase and establish commercial health insurance related to supplementary medical insurance according to the system requirements. Supporting individual insurance agents to participate in social insurance and obtain residence permits in accordance with relevant policies for flexible employees.

Deepening inter-departmental coordination. Promoting the rule of law in the insurance field. Intensifying joint efforts against illegal and irregular activities. Strengthening the connection between law enforcement and discipline enforcement. Establishing a two-way reporting mechanism for major illegal and irregular clues, increasing the transfer of cases. In terms of the removal of illegal and irregular shareholders, risk disposal of problematic institutions, etc., promoting the role of judicial enforcement and centralized jurisdiction Build a regulatory iron army with strong political, professional, and disciplined capabilities. Give greater prominence to political development and deepen the comprehensive strict governance of the Party. Eradicate the soil and conditions for corruption, resolutely punish corruption intertwined with risks, capital, and power, and create a clean political environment.

State Council

September 8, 2024

Original link: Several Opinions of the State Council on Strengthening Regulation, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry