Source: asiainsurancereview.com

China Banking and Insurance Regulatory Commission (CBIRC) and People’s Bank of China (PBOC) have proposed a draft of tighter solvency regulations for insurers.

The three-pillar framework of solvency supervision consists of quantitative capital requirements, qualitative regulatory requirements and market restraint mechanisms. The proposed three-parameter framework which will allow better differentiation of insurers by their capital quality and risk management.

The draft regulation highlights the use of core solvency ratio and comprehensive risk assessment on top of existing comprehensive solvency ratio to improve the monitoring and evaluation of insurers’ solvency management.

Chinese financial regulators’ proposal for tighter solvency regulations is credit positive, says Ms Qian Zhu, VP-senior credit officer, Financial Institutions Group at Moody’s Investors Service. “In our view, this is a more comprehensive and dynamic approach and is aligned with the spirit enshrined in C-ROSS.”