Where Am I?
More In This Section
Tag Cloud

Chinese regulator to start mutual insurance pilot project

BritCham / CBBC
Do you like this article? Share it with your friends!  
Like! Tweet! Weibo Share on LinkedIn

Asia Insurance Review, 4/2/2015
The China Insurance Regulatory Commission (CIRC) has drafted rules to launch mutual insurance pilot schemes in the country, in a move which would help eventually deepen insurance penetration.
According to the proposed rules, CIRC will allow three approaches to mutual insurance:
  • a general mutual insurance organization, which will have to be established as a corporate entity, conducting business in a large territory;
  • a professional mutual insurance organization, operating in a particular industry or area of expertise with issue-specific risk;
  • a regional mutual insurance organization to provide professional insurance services at a local level.
There will be relatively relaxed entry conditions. For example, general mutual insurance organizations need to to have not less than CNY100 million (US$16 million)  in initial working capital and have at least 500 members. Regional and professional mutual insurance organizations need to have at least CNY10 million in initial working capital and have no fewer than 100 members.
CIRC will speed up the legislative and regulatory process as well as communicate and coordinate with relevant departments for preferential policies to create a favourable legal and regulatory environment for mutual insurance.
CIRC says that mutual insurance would promote social management at the rural grassroots level, mitigate risk and ease social conflict in rural areas. The regulator cites three advantages of mutual insurance: the interests of the insured and the insurer are the same with the insured participating in insurance management; costs are relatively low and damage can be assessed with a high degree of accuracy; and with the absence of shareholders, assets and earnings of the mutual insurance fund would be tapped for the  welfare and protection of members of the insurance mutual.
Follow us