Universal Life Insurance Regulatory Changes China February 2015

Starting from 16 February 2015, China Insurance Regulatory Commission (CIRC) has announced the new regulatory changes on universal life insurance products. The new scheme allow China-based insurers to determine their own guaranteed return (only for universal life products). 

This is in line with government's aim to curb irrational competitions between life insurers, specially from smaller insurance companies with online sales. 

Deregulation will encourage insurers to raise profit margin of universal life products, as well as enable companies with better risk management capabilities and financial strength to offer higher coverage and improve policy's quality. Total premiums for universal life insurance in 2014 was CNY400 billion (increased by 21.9% from 2013).

The key regulatory changes for univeral life insurance products in China are:

• Guaranteed minimum interest rate is fully market-oriented;
• Guaranteed rate cap increase, from 2.5% to 3.5%. Products priced at a guaranteed rate higher than 3.5% will require CIRC approval;
• Increase in both protection coverage and regular premiums with sum insured for death to be at least 20% of account value (previously was 5%) and the cap on regular premiums is increased to CNY10,000 (previously CNY6,000)
• Compulsory reserves for universal life liabilities to strengthen insurer's risk management. Companies are required to set up separate reserves to cover the guaranteed returns and variable returns.
• Lower cap on expense loading

Source: http://www.asiainsurancereview.com/News/View-NewsLetter-Article/id/32164/Type/eDaily/China-Universal-life-rate-deregulation-to-test-insurers

Singapore Insurance 2014 Data Review from The Life Insurance Association Singapore

The Life Insurance Association Singapore (LIA Singapore) announced 2014 industry results:

Total sum assured for new business is S$88.7 billion, increased by 7% compared to 2013.

S$2,788.8 million in weighted new business premiums.

23% increase in sales of single premium products, totalling S$860.8 million. 

40% sales increase of new single premium participating (“par”) products.

Weighted annual premium sales slowed by 8% to S$1,928.0 million when compared to 2013. 2013 saw a spike in premiums as a result of the re-pricing of government-program Integrated Shield Plans (IPs). Weighted annual premium sales have stabilised since Q1 2014.

As at end December 2014, the life insurance industry paid out S$6.79 billion to policyholders and beneficiaries: S$6.19 billion for policies that matured, and S$602 million for death, critical illness or disability claims. Death, CI and disability showed a 13% increase from 2013 – an indication that the industry is providing increased protection to the Singapore market.

On health insurance, approximately one in two persons in Singapore (2.75 million lives) has health cover with total premiums amounting to S$1.6 billion as at 31 December 2014.

Total premium income from new health insurance premiums in 2014 is S$266 million, 42% lower than 2013. 

"Singapore Parliament has passed the MediShield Life Scheme Bill into law, officially introducing universal health insurance in Singapore on a national scale. As we gear up for the launch of MediShield Life at end 2015, LIA Singapore and Integrated Plan insurers will continue to work in close collaboration with the Government to further improve public education on health insurance and how MediShield Life and IPs work, and their relationship with each other. The insurers are also developing the standard B1 plan jointly with the Ministry of Health (MOH)."

"To allow for a smooth transition, the five IP insurers have committed not to increase the top-up portion of IP premiums for plans covering Class B1 and A wards of public hospitals for one year following the implementation of MediShield Life. Supporting the cost management efforts for IP premiums, IP insurers will collaborate with policymakers and relevant bodies to improve price transparency of professional fees within the healthcare industry, review and apply global pricing benchmarks, as well as leverage data analytics to allow for better scrutiny of unusually high healthcare bills."

Also, LIA Singapore is working with the Monetary Authority of Singapore (MAS) to study the impact of the Risk-based Capital 2 (RBC2) framework on the industry and its solvency. LIA-MAS team plans to launch the Web Aggregator and Direct Purchase Insurance (DPI) products in 2015.

Source: http://www.lia.org.sg/node/4082

China 2014 Insurance Growth

China Insurance Regulatory Commission:  China insurers gained total premium income of more than CNY2 trillion (US$320.5 billion) in 2014. 

Growth reached a three-year high of 17.5%. 

Total assets in the industry gained more than CNY10 trillion, achieving the country's target one year earlier than what is set set under the 12th Five-Year Plan. 

The jump in growth of sales was seen mainly through mobile platforms, which pushed online policy sales in 2014.

Premium income from life insurance policies sold online increased 548.51% to CNY35.32 billion, while property insurance policies rose 113.65% to CNY50.6 billion. 

Source: http://www.asiainsurancereview.com/News/View-NewsLetter-Article/id/32139/Type/eDaily?utm_source/Edaily-News-Letter/utm_medium/Group-Email/utm_campaign/Edaily-NewsLetter

China Insurance News: Top 2014 Foreign and Local Insurers in China

Foreign insurer in China:

AXA Tian Ping is the top joint venture P&C insurer in 2014 with premium income of CNY6.61 billion (US$1.06 billion), according to new data release by CIRC. This is 4.5 times more than the second insurer which registered CNY1.46 billion in premium income.

While the top foreign life insurer in 2014 goes to ICBC-AXA Life, with life premium income jumped 49.7% y-o-y to CNY15.4 billion (US$2.46 billion). 

Local insurer in China:

PICC remained the top non-life insurer in 2014 with CNY252.42 billion (US$40.39 billion) in premium income, up 13.19% y-o-y. The top five remained unchanged from 2013. The other four consecutively are Ping An, CPIC, China Life, and China United.

The top life insurer in 2014 was China Life with premium income of CNY331.24 billion (US$52.97 billion), giving a growth of 1.38%,

On a separate headline, Anbang Insurance Group has received the approval from US regulators for the US$1.95 billion purchase of Waldorf Astoria Hotel in New York.

China Insurance Regulatory Commission Announced Adoption of C-ROSS, New Solvency System 2015

China Insurance Regulatory Commission (CIRC) has recently announced the full adoption of China Risk Oriented Solvency System (C-ROSS). It is officially the second generation of solvency regulatory mechanism in China. Transition period has started last 13 February 2015, and insurance companies with operational activities in China has been duly notified by the regulators. 

In this transitional period, insurance companies are required to submit solvency reports in both the existing solvency and the new C-ROSS regulations. 

"C-ROSS aims to ensure the solvency of insurance industry in China while improving its overall competitiveness, and promote risk management across the industry."

"C-ROSS adopts a qualitative supervisory approach complementing the quantitative assessment of an insurance company's solvency position. The new solvency system also promotes capital efficiency by linking capital requirements more closely to risks, with the valuation of assets and liabilities reflecting actual risk profiles."

To ensure smooth implementation of the new system, CIRC encourages each insurance company to set up a task force composed of people from the finance, actuarial, risk management, investment, business and information technology and other relevant departments.

In January 2015, Mr Chen Wenhui, CIRC Vice Chairman, said that C-ROSS implementation would allow insurers to release redundant capital totalling CNY550 billion (US$87.9 billion). The life insurance industry would be able to release CNY500 billion in excess funds while the non-life insurance sector would find that CNY50 billion is redundant capital.