On 11 September 2024, the State Council of China issued Several Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-quality Development of the Insurance Industry (“Opinions”). It is the third time China has released a guide on the development of the insurance industry at the national level. The previous two guides were Some Opinions of the State Council on the Reform and Development of the Insurance Industry issued on 15 June 2006 and Several Opinions of the State Council on Accelerating the Development of the Modern Insurance Service Industry issued on 10 August 2014. The Opinions mainly optimize and upgrade the liabilities and assets of the insurance industry by strengthening supervision, preventing risks and promoting a high-quality insurance industry, and make systematic plans and arrangements for the development of China’s insurance industry in the next 10 years. According to it, by 2035, China’s insurance industry should have formed a complete market system with rich and diverse insurance products and services, scientific and effective supervision, and strong international competitiveness.
After more than 40 years of development, China’s insurance market has become the world’s second-largest one with more than 200 market players and nearly RMB 30 trillion (Equivalent to US$ 4.22 trillion) in total assets. At present, China's insurance products and services have penetrated all walks of life, and the insurance density and insurance depth have been greatly improved. At the same time, the continuous improvement of China’s economic development and the people’s material living standards have put forward new requirements for the functions and positioning of the insurance industry. Against this background, the Opinions put forward requirements for the development of the industry in the next ten years in nine aspects, such as strict control of insurance market access, strict supervision of insurance institutions, serious rectification of insurance violations, effective prevention and resolution of insurance risks, improving the level of insurance services for people’s livelihood, improving the quality and efficiency of insurance services, deepening the reform and opening up of the insurance industry, enhancing the sustainable development capabilities of the insurance industry, and strengthening the coordination of policies to promote high-quality development of the insurance industry.
In terms of improving the level of insurance services for people’s livelihood, the Opinions point out that it is necessary to enrich the forms of catastrophe insurance protection, actively develop the third pillar of pension insurance, expand the coverage of health insurance, and improve the inclusive insurance system. According to the Opinions, China will promote the government-led market-oriented multi-channel and multi-level catastrophe insurance protection mechanism, including issuing catastrophe bonds and developing climate insurance, and expanding the scope of protection; will vigorously develop commercial insurance annuities, encourage the development of new products and exclusive products that adapt to the personal pension system, and enrich insurance products, services and insurance fund support methods that are compatible with the economy of the elderly; will enrich the forms of commercial medical insurance products, promote the rapid settlement of medical expenses, and promote the deep integration of commercial health insurance and health management; and will expand the insurance service areas, fields and groups to better meet the insurance needs of groups including farmers and low-income urban residents.
In terms of improving the quality and efficiency of insurance services, the Opinions clearly state that China will focus on major national strategies and key areas. The insurance industry should improve the insurance product and service system covering the entire life cycle of technology companies; should improve agricultural insurance, rural infrastructure insurance, and marine insurance, explore international road transport risk insurance, and expand the coverage of export credit insurance. Meanwhile, it points out that it is necessary to promote the virtuous cycle of funds, capital, and assets by increasing investment in strategic emerging industries, advanced manufacturing, and new infrastructure, and guiding insurance funds to provide support for technological innovation, venture capital, rural revitalization, and the development of green and low-carbon industries.
It is required by the Opinions to reform deeply in key areas of the insurance industry and promote high-level opening up. While supporting large insurance institutions to become better and stronger, it will guide small and medium-sized insurance companies to develop specialized operations. The Opinions proposed for the first time the development of floating-income insurance and emphasized the reform requirements for auto insurance and agricultural insurance. To promote high-level opening up, China supports high-quality foreign insurance institutions to set up legal entities and branches in China and qualified foreign institutions to invest in domestic insurance institutions, and encourages Chinese insurance institutions to expand overseas business.
Finally, regarding strengthening the coordination of policies, the Opinions require the formulation of a list of matters for coordination between the central and local governments and the clarification of the work process. In terms of strengthening macroeconomic policy coordination, it requires that the mechanism for dispersing the risk of major disasters in agricultural insurance supported by the fiscal budget should be improved, and the premium subsidies for major grain crops and local specialty agricultural products from the central and provincial governments should be reasonably arranged. In terms of deepening inter-ministerial coordination, it requires to increase in the joint crackdown on illegal activities. For example, when clearing out shareholders who violate laws and regulations and dealing with the risks of problematic institutions, the role of judicial enforcement and centralized jurisdiction should be brought into play.
Many contents in the Opinions are mentioned for the first time in the State Council documents, such as supporting the development of floating income insurance, vigorously developing commercial insurance annuities, improving the insurance products and service system of technology companies throughout their life cycle, and cultivating patient capital. Behind these first mentions is the recognition that the insurance industry is not only a part of economic activities but also an important tool for social governance and people's livelihood security. As a result, the focus of the Opinions is to give full play to the insurance industry’s function as a social stabilizer and economic shock absorber, and require the insurance industry to serve the people’s livelihood and the economy.
After more than 40 years of development, China’s insurance market has become the world’s second-largest one with more than 200 market players and nearly RMB 30 trillion (Equivalent to US$ 4.22 trillion) in total assets. At present, China's insurance products and services have penetrated all walks of life, and the insurance density and insurance depth have been greatly improved. At the same time, the continuous improvement of China’s economic development and the people’s material living standards have put forward new requirements for the functions and positioning of the insurance industry. Against this background, the Opinions put forward requirements for the development of the industry in the next ten years in nine aspects, such as strict control of insurance market access, strict supervision of insurance institutions, serious rectification of insurance violations, effective prevention and resolution of insurance risks, improving the level of insurance services for people’s livelihood, improving the quality and efficiency of insurance services, deepening the reform and opening up of the insurance industry, enhancing the sustainable development capabilities of the insurance industry, and strengthening the coordination of policies to promote high-quality development of the insurance industry.
In terms of improving the level of insurance services for people’s livelihood, the Opinions point out that it is necessary to enrich the forms of catastrophe insurance protection, actively develop the third pillar of pension insurance, expand the coverage of health insurance, and improve the inclusive insurance system. According to the Opinions, China will promote the government-led market-oriented multi-channel and multi-level catastrophe insurance protection mechanism, including issuing catastrophe bonds and developing climate insurance, and expanding the scope of protection; will vigorously develop commercial insurance annuities, encourage the development of new products and exclusive products that adapt to the personal pension system, and enrich insurance products, services and insurance fund support methods that are compatible with the economy of the elderly; will enrich the forms of commercial medical insurance products, promote the rapid settlement of medical expenses, and promote the deep integration of commercial health insurance and health management; and will expand the insurance service areas, fields and groups to better meet the insurance needs of groups including farmers and low-income urban residents.
In terms of improving the quality and efficiency of insurance services, the Opinions clearly state that China will focus on major national strategies and key areas. The insurance industry should improve the insurance product and service system covering the entire life cycle of technology companies; should improve agricultural insurance, rural infrastructure insurance, and marine insurance, explore international road transport risk insurance, and expand the coverage of export credit insurance. Meanwhile, it points out that it is necessary to promote the virtuous cycle of funds, capital, and assets by increasing investment in strategic emerging industries, advanced manufacturing, and new infrastructure, and guiding insurance funds to provide support for technological innovation, venture capital, rural revitalization, and the development of green and low-carbon industries.
It is required by the Opinions to reform deeply in key areas of the insurance industry and promote high-level opening up. While supporting large insurance institutions to become better and stronger, it will guide small and medium-sized insurance companies to develop specialized operations. The Opinions proposed for the first time the development of floating-income insurance and emphasized the reform requirements for auto insurance and agricultural insurance. To promote high-level opening up, China supports high-quality foreign insurance institutions to set up legal entities and branches in China and qualified foreign institutions to invest in domestic insurance institutions, and encourages Chinese insurance institutions to expand overseas business.
Finally, regarding strengthening the coordination of policies, the Opinions require the formulation of a list of matters for coordination between the central and local governments and the clarification of the work process. In terms of strengthening macroeconomic policy coordination, it requires that the mechanism for dispersing the risk of major disasters in agricultural insurance supported by the fiscal budget should be improved, and the premium subsidies for major grain crops and local specialty agricultural products from the central and provincial governments should be reasonably arranged. In terms of deepening inter-ministerial coordination, it requires to increase in the joint crackdown on illegal activities. For example, when clearing out shareholders who violate laws and regulations and dealing with the risks of problematic institutions, the role of judicial enforcement and centralized jurisdiction should be brought into play.
Many contents in the Opinions are mentioned for the first time in the State Council documents, such as supporting the development of floating income insurance, vigorously developing commercial insurance annuities, improving the insurance products and service system of technology companies throughout their life cycle, and cultivating patient capital. Behind these first mentions is the recognition that the insurance industry is not only a part of economic activities but also an important tool for social governance and people's livelihood security. As a result, the focus of the Opinions is to give full play to the insurance industry’s function as a social stabilizer and economic shock absorber, and require the insurance industry to serve the people’s livelihood and the economy.