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China to refine financial services, promote development of personal insurance

Wang Keju
Updated: Dec 09,2020 09:49 PM    english.www.gov.cn

China will adopt a host of policy steps to promote the scale and quality of the personal insurance sector and facilitate its steady development, to meet people’s diverse needs, the State Council’s executive meeting chaired by Premier Li Keqiang decided on Dec 9.

It was agreed at the meeting that further improving financial services and promoting the development of personal insurance is conducive to better serving people’s essential needs and facilitating economic and social development. China’s personal insurance has seen sound and fast development in recent years, with commercial personal insurance reaching considerable coverage nationwide, yet problems such as insufficient supply and low level of protection still exist.

“The personal insurance sector in China has made notable progress in recent years, with insurance coverage continuously expanding and public awareness of risks steadily increasing. That said, the sophistication and coverage of China’s personal insurance sector remain modest. This also indicates that China is a huge insurance market with enormous potential,” Premier Li said.

The meeting emphasized the need to deepen reform of the insurance sector with a focus on optimizing supply and providing high-quality personal insurance products, to meet people’s needs for health, old-age support and safety protection. Development of commercial insurance should be stepped up. Commercial medical insurance products that suit the needs and paying capacity of the elderly should be developed. Insurance companies will be encouraged to incorporate medical expenses, within a reasonable range but outside basic medical insurance catalog, into insurance coverage.

“We must focus on key areas, especially medical insurance and commercial health insurance. More types of insurance targeting critical illnesses should be supported and aligned with the basic medical insurance system as supplement to enhance critical illness insurance protection for urban and rural residents,” Premier Li said. “Openness should be extended in an orderly manner, and international cooperation strengthened, to promote the development of health insurance and provide better services. At the current stage, medical insurance remains a top priority to meet people’s growing demand for greater health.”

Commercial endowment insurance, which serves as the third pillar of China’s pension system, will be brought under unified standards and regulations, and its development will be stepped up. The protection function of commercial endowment insurance should be intensified. Endowment insurance featuring convenient application, flexible payment and relatively stable earnings should be supported, and pension annuity insurance products actively developed. The insurance sector is encouraged to participate in a pilot long-term care insurance scheme.

“Commercial endowment insurance should be vigorously developed. In the past few years, new industries and new business models have emerged as China deepens reform of government functions and encourages entrepreneurial and innovation activities nationwide. Suitable supplementary endowment insurance should be developed to cater to the needs of people working in these businesses, as well as of those in flexible employment, to ensure more reliable guarantees for the future. It will help sustain existing jobs and create new jobs. This is a major task, and breakthroughs should be made,” the Premier said.

Long-term investment capabilities should be enhanced. Supervision of assets and liabilities will be strengthened, and risk prevention and control stepped up. Differentiated regulatory ratios should be adopted for equity assets involving insurance fund investments, up to 45 percent of the company’s total assets.

Insurance funding will be encouraged to participate in major construction projects such as infrastructure and new-type urbanization, to more effectively bring out its role in driving the real economy. Special rectification regarding related-party transactions will be carried out, to resolutely deter illegal acts of misuse, arbitrage or embezzlement of insurance company funds.

“Risk prevention and control must be enhanced on an ongoing basis to prevent speculative use of insurance funds. Greater efforts should be made to address the difficulty in settling insurance claims and draw more people to participate in insurance schemes,” Premier Li said.

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