Thursday, December 14, 2017

CIRC issues new regulations to rein in credit risks

China’s top insurance watchdog has issued a draft regulation seeking to standardise insurance businesses and protect the industry from credit risks.

Based on the draft rules issued by the China Insurance Regulatory Commission (CIRC), insurers that give coverage against credit risks may have a core solvency adequacy ratio of at least 75% in the most recent quarter, but their comprehensive solvency adequacy ratio must be above 150%.

Under the draft, companies that fail this requirement will be ordered to discontinue offering new insurance on credit risks.

In addition, insurers will be also banned from offering cover to firms with a rating of AA or lower. Details on the upper limit of outstanding liabilities of insurers are also included in the draft.

The public will have until June 25 to provide their opinions on the draft. CIRC said the proposed regulations are still open for revision.

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