CBIRC sets up new reserve measures for non-life

The China Banking and Insurance Regulatory Commission (CBIRC) recently issued the Implementation Measures of the Rules on Reserve of Non-life Insurance Business of Insurance Companies (No.1-7).

The main contents of the Implementation Measures include clarifying the principles and methodology of reserve assessment, and requiring insurance companies to use reasonable methods and assumptions for reserve assessment. Second, stipulating the internal control process of reserve assessment. When changes with significant impact arise in the reserve assessment of an insurance company, a process for Board resolution shall be initiated. Third, regulating the treatment of risk margin and discounting in reserve assessment. The method of calculating risk margin shall not be altered at will once determined. The duration criteria for discounting in reserve assessment are also clarified. Fourth, strengthening reserve management of insurance company branches. The reserve assessment by an insurance company on its branches shall objectively and fairly reflect the branches’ operation without any discretionary adjustment. Fifth, regulating the retrospective analysis of reserves. When there are large deviations in the retrospective analysis results of insurance companies’ reserves, specific rectification measures shall be put in place by the companies. Sixth, clarifying the content of the reserve assessment report, standardizing the specific information to be disclosed and the expression of actuarial opinions, and requiring insurance companies to fill in the regulatory returns for reserves. Seventh, improving the reserve assessment working draft system, standardizing the preparation, review and use of the working draft, and requiring insurance companies to keep working draft record for inspection.