On February 9, 2009, the China Insurance Regulatory Commission (CIRC) issued a set of guiding opinions to expedite the business structure adjustment of insurance companies. In particular, CIRC encourages insurance companies to make more efforts to develop personal insurance products that safeguard against risks and offer security, and to strengthen the long-term savings function of long-term savings personal insurance products.  

The Guiding Opinions on Expediting the Business Structure Adjustment and Further Developing the Protection Function of Insurance took effect on their date of issuance. The Guiding Opinions were issued to implement the Several Opinions of the General Office of the State Council on Providing Financial Support for Economic Development, which implements a part of the RMB4-trillion economic stimulus plan.  

The Guiding Opinions encourage insurance companies to offer personal insurance plans that safeguard against risks, mainly including accident insurance, health insurance, annuity insurance, term life insurance, and certain whole life insurance and endowment insurance plans.  

In addition, the Guiding Opinions encourage the development of the long-term savings function of personal insurance products. They provide that the term of endowment insurance should not be less than five years, and that insurance companies should vigorously develop endowment insurances that are longer than ten years.  

The Guiding Opinions emphasize asset-liability management and require insurance companies to thoroughly consider their financing abilities when designing products. In addition, the document calls for personal insurance companies to promote the development of insurance products that offer security against risks, and long-term savings focusing on the agricultural industry, rural areas, farmers, public health, and the old-age pension insurance system.  

The Guiding Opinions signify that Chinese insurance regulators are viewing insurance products that offer security against risks, or long-term savings, as the core businesses of the insurance sector, which the government is pushing to develop. According to officials of CIRC, while the amount of insurance premiums has been growing at 30 percent annually since the Chinese government reopened the door to insurance companies in 1980, the business structures of the insurance industry are unbalanced. Take 2008 as an example, in terms of life insurance businesses, short-term plans made up a disproportionate percentage, and accident insurance and health insurance, the two major risk-guarding insurance types, only constituted 10.56 percent of the total premium amount. For non-life-insurance products, vehicle insurances contributed to 72.86 percent of the insurance companies’ premium income. For a healthy development of the Chinese insurance industry, Chinese regulators believe that insurance companies in China must build and maintain as the pillars of their businesses more long-term insurance plans that safeguard people against risks.