The China Insurance Regulatory Commission (CIRC) issued a circular on the proposed product self-registration regime for property insurance companies (关于开展财产保险公司备案产品自主注册改革的通知) on 3 March 2016. This proposed regime will reform the current system of recordal filing, which these companies are required to make with the CIRC for their relevant products.
Measures to be implemented
- Modification of existing product management process - Change of the existing product recordal process from filing with the CIRC to self-registration by property insurance companies for non-agricultural insurance products. The self-registration will be carried out on a platform to be established by an industry association. The platform automatically verifies the materials submitted and registers products with complete materials in real time. The industry association will be responsible for central filing to the CIRC via an electronic filing system and companies are not required to submit materials to the CIRC.
- Establishment of a transparent system for registered products - Information of registered products will be open to public in a timely manner. Property insurance companies can enquire into the product registration's progress and the registered products while the public can access the information of registered products online. All levels of insurance regulatory authorities can inquire into the registration progress and intervene if potential problems are found, so that regulatory guidance can be provided in time.
- Establishment of an inspection and product exit mechanism - Regulatory authorities will conduct inspections on registered products regularly or on an ad-hoc basis, in order to examine the legality and compliance status of the policy provisions and the policy charges, etc. Any problems discovered in the course of inspection or daily monitoring will be penalized and non-compliant products will be withdrawn.
- Industry self-restraint mechanism - The industry association will conduct research and assessment on key products and the assessment findings will be shared with the insurers, so that they can make further improvements. The findings may also be reported to the regulatory authorities where necessary. The industry association will also propose key insurance model clauses and standard for pure risk of loss ratio for companies' reference. It may also issue insurance product development guidelines to standardize product development activities.
- Strengthen product internal control - All property insurance companies are required to monitor and conduct assessment on the legality and compliance status of policy provisions in accordance with market conditions and feedback from the insured and media, etc. Companies are also required to conduct annual assessment on the reasonableness of policy charges according to statistics, business conditions and capital reserve, etc. Annual assessment on current products for sale is also required and timely adjustments will need to be made where required.
Based on the tentative timeframe, the planning and feasibility proposal for the new regime will be completed before May 2016 and the establishment of self-registration platform and database will be completed before July 2016 for various testing purposes. The exact date for the commencement of the regime will be further advised by the CIRC at a later stage.
This reform aims to fully implement the "Opinions of the State Council on Accelerating the Development of the Modern Insurance Service Industry" (国务院关于加快发展现代保险服务业的若干意见) issued in 2014, with the aim to improve the product management system of property insurance companies and to promote its market. This initiative will also encourage product innovation and enhance regulatory efficiency.