Beijing to Set Minimum Core Solvency Adequacy Ratio of 50% for Chinese Insurers

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The Chinese central government has unveiled plans to mandate that the country’s insurers must have a core solvency adequacy ratio of no less than 50% in future.

The China Banking and Insurance Regulatory Commission (CBIRC) announced on 30 July that it had recently worked with the People’s Bank of China (PBOC) to issue an amended draft version of the “Insurance Company Solvency Administrative Provisions” (保险公司偿付能力管理规定) for the solicitation of opinions from the public.

The Provisions mandate that Chinese insurance companies must simultaneously satisfy three regulatory requirements to qualify as solvent concerns, including:

  1. A core solvency adequacy ratio of not less than 50%;
  2. A comprehensive solvency adequacy ratio of not less than 100%;
  3. A comprehensive risk assessment grade of at least “B.”

The Provisions state that CBIRC will “lawfully adopt regulatory measures directed at companies whose solvency levels do not meet standards, based on their risk factors and risk levels.”

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