New 'National 10' Sets Future Direction, Introduces Insurance Guarantee
The "New National Ten Measures" first proposed "studying and improving the policy payout mechanism linked to risk," and put forward disposal opinions for institutions with high risk and lack of sustainable operation ability.
Ten years later, the State Council issued the "Several Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry" (State Document No.
21 of 2024) (hereinafter referred to as the "New National Ten Measures"), once again promoting the development of the insurance industry in a "top-level design" manner, and clearly stating that the next 10 years of the insurance industry will "focus on strong supervision, risk prevention, and promoting high-quality development."
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The issuance of the "New National Ten Measures" has attracted attention, and the most concerned content in the industry includes: studying and improving the policy payout mechanism linked to risk; improving the market exit mechanism, for insurance institutions with high risk and lack of sustainable operation ability, confiscating financial licenses, and legally entering the bankruptcy liquidation process; steadily carrying out domestic and foreign currency policy business, and prudently promoting global asset allocation, etc.
In fact, this is the third time that the State Council has made a comprehensive deployment of the development of the insurance industry from the national level.
In June 2006, the State Council issued the "Several Opinions on the Reform and Development of the Insurance Industry" ("National Ten Measures" 1.0 version), and in August 2014, it issued the "Several Opinions on Accelerating the Development of Modern Insurance Services" ("National Ten Measures" 2.0 version), and the issuance of these two versions of the "National Ten Measures" has played a significant role in promoting the development of the insurance industry.
Compared with the previous two versions of the insurance industry "National Ten Measures," this "New National Ten Measures" emphasizes promoting the "high-quality development" of the insurance industry, and in the overall requirements, the expression has changed from "insisting on improving supervision" in 2014 to "insisting on strict supervision."
The "New National Ten Measures" includes ten core contents, focusing on "strong supervision, risk prevention, and promoting high-quality development," and systematically plans and arranges the reform and development of China's insurance industry in the next 5 to 10 years.
Specifically, by 2029, a preliminary framework for high-quality development of the insurance industry will be formed, with a steady expansion of coverage, increasingly comprehensive protection, continuous improvement of services, robust and balanced asset allocation, sufficient solvency, and sound governance and internal control.
The insurance supervision system will be more robust, and the supervision capabilities and effectiveness will be greatly improved.
By 2035, a new pattern of the insurance industry with a complete market system, rich and diverse products and services, scientific and effective supervision, and strong international competitiveness will be basically formed.
Xu Xian, the director of the Risk Management and Insurance Department of the School of Economics at Fudan University, believes that in the process of promoting the high-quality development of the insurance industry, it is necessary to construct a complete and effective access standard, supervision system, and risk management mechanism, and clarify the responsibility for local risk disposal; in addition to the high-level development of the social insurance system, actively promote the development of public-private cooperation products such as urban customized inclusive commercial medical/property insurance, catastrophe insurance, and promote the connection and development of commercial health insurance and commercial pension insurance with China's social insurance system, and promote the orderly connection and market prosperity of various levels of insurance systems.
In terms of risk resolution, the "New National Ten Measures" emphasizes the supervision and risk of the market exit mechanism, and the corresponding content is far more than the previous two versions of the "National Ten Measures."
Xu Xian believes that the above changes have made a practical response to the "National Ten Measures" pointed out by the Third Plenary Session of the 20th Central Committee, which "implements various measures to prevent and resolve risks in key areas such as real estate, local government debt, and small and medium-sized financial institutions."
According to the interpretation of the non-bank financial team of Dongwu Securities, the "New National Ten Measures" first proposed "studying and improving the policy payout mechanism linked to risk" in the field of risk resolution for small and medium-sized insurance companies, providing a breakthrough for revising the "Insurance Law" to break the rigid payment, "expanding the sources of risk disposal funds, supporting qualified enterprises to participate in the reform and risk resolution of insurance companies, and improving the insurance guarantee fund to participate in the risk disposal mechanism" and "for institutions with high risk and lack of sustainable operation ability, confiscating financial licenses, and legally entering the bankruptcy liquidation process" indicates the determination to resolve risks.
Xu Xian said that governing industry chaos and preventing various risks is the premise for achieving high-quality development.
To this end, the "New National Ten Measures" emphasizes that supervision "has teeth and thorns," and from four dimensions of "strictly controlling the insurance market access," "strictly supervising the continuous operation of insurance institutions," "seriously rectifying illegal and irregular behaviors of insurance institutions," and "effectively preventing and resolving risks in the insurance industry," it ensures that supervision and risk disposal are fully covered and without exception.
"Especially the 'New National Ten Measures' starts from 'people,' and first emphasizes a series of issues in the internal governance and operation of insurance companies, clarifying matters such as the appointment, performance, and dereliction of duty of management personnel, shareholder qualifications, behavior, and the grading and classification of sales personnel, which are more to the point than the previous two versions of the 'National Ten Measures.'"
Xu Xian said.
From the specific content, the "New National Ten Measures" emphasizes the effective prevention and resolution of risks in the insurance industry, and it is necessary to continue to prevent and resolve the risks of emerging and trending hidden dangers.
Improve the risk warning system and strengthen the responsibility for warning response.
Strengthen risk monitoring and analysis, and track and judge the risks in key areas.
Strengthen duration and interest rate risk management.
Establish a hard constraint system for early risk correction.
At the same time, promote risk disposal steadily.
Expand the sources of risk disposal funds and support qualified enterprises to participate in the reform and risk resolution of insurance companies.
The "New National Ten Measures" emphasize the improvement of the market exit mechanism.
For insurance institutions with high risk and lack of sustainable operation ability, confiscate financial licenses and legally enter the bankruptcy liquidation process.
Implement the local party committee and government's responsibility for risk disposal, strengthen the supervision responsibility of the central financial management department, and promote risk disposal in coordination.
In terms of strictly controlling the insurance market access, the "New National Ten Measures" requires strict approval of insurance institutions.
Strictly approve the establishment of new insurance institutions according to the law.
Optimize the regional and hierarchical layout of institutions, and promote the reduction of quantity and improvement of quality in a stable and orderly manner.
Promote business level management.
Strictly review the qualifications of management personnel.
Improve the qualification review mechanism for directors, supervisors, and senior management personnel of insurance institutions.
Strengthen the supervision of the performance of the chairman and general manager.
Establish a negative information database for key personnel, increase the accountability for dereliction of duty, and prevent "disease flow."
Strictly review shareholder qualifications.
Improve the rules for the management of insurance company equity.
Strictly review the qualifications, sources of funds, and behavior of shareholders in a penetrating manner.
Prohibit enterprises with illegal cross-industry operations, excessive leverage, serious dishonest behavior, and major illegal and irregular records from becoming major shareholders or actual controllers of insurance institutions.
Establish a "blacklist" system for shareholders and actual controllers, and increase the intensity of clearing major illegal and irregular shareholders.
In addition, the "New National Ten Measures" emphasize strict continuous supervision of insurance institutions and improve the interest rate transmission and liability cost adjustment mechanism.
Guide the optimization of asset allocation structure and improve the ability of cross-market and cross-cycle investment management.
Urge the clarification of the division of responsibilities between the principal and the trustee.
Strengthen the supervision of the entire investment process.
Use financial derivatives in accordance with the law and compliance.
Prudently promote global asset allocation.
It is required to strengthen classified supervision.
Improve the supervision rating system of insurance institutions and strengthen the use of rating results.
Promote the classified management of insurance sales personnel.
Strengthen product fee difference supervision.
Reasonably allocate regulatory resources, implement high-intensity supervision for high-risk and low-intensity supervision for low-risk.
Strictly prevent regulatory arbitrage and regulatory vacuum.
In terms of how to promote the "high-quality development" of the insurance industry, the "New National Ten Measures" also provide a clear answer.
According to a senior insurance person in the industry, compared with the previous two versions of the "National Ten Measures" with a large amount of text describing the development goals of each insurance type and the role of each category, the "New National Ten Measures" further "jumps out of the industry perspective," examines the industry's goals and opportunities from a larger pattern, and refines and summarizes the main subjects of action into two categories of "service to people's livelihood protection" and "service to the real economy," reflecting a precise understanding of the functions of the insurance industry.
From the specific measures of the "New National Ten Measures," in terms of improving the level of service of the insurance industry to people's livelihood protection, the "New National Ten Measures" requires, first, to enrich the forms of catastrophe insurance protection.
Adhere to the principle of government promotion and market operation, explore the establishment of multi-channel and multi-level catastrophe insurance protection mechanisms, etc.
Second, actively develop the third pillar of pension insurance.
Vigorously develop commercial insurance annuities.
Encourage the development of new products and exclusive products that adapt to the personal pension system.
Enrich insurance products, services, and insurance fund support methods that are adapted to the silver economy, etc.
At the same time, expand the coverage of health insurance.
Enrich the forms of commercial medical insurance products and promote the rapid settlement of medical expenses.
Include the application of new medical technologies, new drugs, and new equipment in the protection scope.
Promote the deep integration of commercial health insurance and health management.
Encourage the provision of insurance products for groups such as the elderly and chronic disease patients.
Try out regional insurance drug and equipment catalogs.
Explore the establishment of a "blacklist" system for third-party service institutions, etc.
Xu Jinghui, the former chairman of Taibao Life Insurance and the former general manager of Dajia Insurance Group, believes that the "New National Ten Measures" clearly propose to improve the service protection level of health insurance, which will be beneficial to improve the welfare of the people, enrich insurance products and services, and improve the multi-level medical security.
With the implementation of the "New National Ten Measures," the problem of "no insurance to protect" for special groups such as sick bodies and the elderly will be solved, and advanced treatment and drug and equipment have commercial insurance as an important means of payment to connect, which also makes up for the insufficiency of China's basic medical insurance and can meet the diversified medical security needs of the people.
In terms of deepening the reform and opening up of the insurance industry, the "New National Ten Measures" requires the continuous improvement of the insurance market system.
Support large insurance institutions to be excellent and strong, and guide small and medium-sized insurance companies to develop characteristic and specialized operations.
Second, continue to deepen key field reforms.
Improve the product pricing mechanism and strengthen the use of actuarial technology.
Promote product transformation and upgrading, and support the development of floating income insurance.
Focus on new energy vehicle commercial insurance and deepen comprehensive auto insurance reforms, etc.
The "New National Ten Measures" also mentioned steadily carrying out domestic and foreign currency policy business and prudently promoting global asset allocation.According to the remarks of a senior insurance industry insider, in the new development phase, the insurance industry needs to focus on supply-side structural reforms to enrich product and service offerings, promote quality and innovation in products and services, and continuously optimize consumer rights protection mechanisms.
For example, the "New National Ten Articles" propose "supporting the development of floating return insurance" and "playing the role of life insurance in family protection and wealth inheritance," which is a timely response to the current changing market environment and diverse consumer demands.
After the issuance of the "New National Ten Articles," several insurance institutions have expressed their high-quality development directions for the future.
The relevant person in charge of the China People's Insurance Group stated that they will adhere to high-quality development as the primary task, grasp the significant development opportunities brought by the "New National Ten Articles," strengthen the establishment of a big insurance concept, and unswervingly promote growth and improve efficiency.
They will also vigorously advance the innovation of the "insurance + service + technology" business model while insisting on placing risk prevention in a prominent position.
Xinhua Insurance stated that it will focus on the main responsibilities and businesses of life insurance, enrich and improve insurance products and services, accelerate the strategic transformation centered on customers, and build a multi-level customer service ecosystem.
It will also persist in cultivating and strengthening patient capital, leverage the advantages of long-term and strategic capital of insurance funds, improve the quality and efficiency of serving the real economy, and help accelerate the development of new quality productive forces.
Taiping Life Insurance stated that it will vigorously enhance insurance protection capabilities and service levels to help build a strong economic safety net, social security net, and disaster prevention and control network.
It will continue to optimize and improve the insurance product and service system, actively develop the third-pillar pension insurance and commercial insurance annuities, expand health insurance coverage, and improve the inclusive insurance system.
It will also strengthen a prudent and balanced asset allocation structure, increase support for national strategic industries, and improve the quality and efficiency of serving the real economy.
Ping An Insurance stated that it will adhere to the principle that "insurance is for protection," return to the essence of protection, and actively play an important role in insurance in guaranteeing and improving people's livelihoods, disaster prevention and loss reduction, and serving the real economy.
It will also maintain prudent and stable operations, continuously improve risk control and compliance levels, and continuously promote the "comprehensive finance + medical and elderly care" dual-wheel strategy driven by technology, continuously improving the quality and efficiency of financial services through reform and innovation.
(Appendix: Key Content of the "New National Ten Articles": 1.
For insurance institutions with high risks and no ability to continue operating, revoke financial licenses and enter bankruptcy liquidation procedures according to the law.
2.
Study and improve the policy-linked insurance payment mechanism linked to risks.
3.
Promote product transformation and upgrading, support the development of floating return insurance, vigorously promote accidental injury insurance, explore innovation in liability insurance and home property insurance.
4.
Institutions that meet regulations may purchase commercial health insurance related to supplementary medical insurance with financial funds according to system requirements.
5.
Steadily carry out domestic and foreign currency insurance policies, prudently promote global asset allocation, and support qualified foreign institutions to invest in domestic insurance institutions.
6.
Establish a "blacklist" system for shareholders and actual controllers, and increase the intensity of clearing major illegal and irregular shareholders.
7.
Play the role of life insurance in family protection and wealth inheritance, promote the coordinated development of the insurance industry and the elderly care service industry, and encourage the deep integration of commercial health insurance with health management.
8.
Establish a negative information database for key personnel in positions, increase accountability for dereliction of duty, and prevent "disease flow."
9.
Support individual insurance agents to participate in social insurance and handle residence permits in accordance with the relevant policies for flexible employment personnel.
10.
Strictly approve insurance institutions, strictly review the qualifications of management personnel, and strictly review the qualifications of shareholders.
Strictly prohibit illegal investment in industries and enterprises unrelated to the main business of insurance.)