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Development and Regulation of China's Insurance Market

中国保险与风险管理研究中心 China Center for Insurance and Risk Management. Development and Regulation of China's Insurance Market. Bingzheng Chen Sharon Tennyson Maoqi Wang Haizhen Zhou. Content. 1. Introduction 2. China’s Insurance Market 2.1 Market Size and Development

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Development and Regulation of China's Insurance Market

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  1. 中国保险与风险管理研究中心 China Center for Insurance and Risk Management Development and Regulation of China's Insurance Market Bingzheng Chen Sharon Tennyson Maoqi Wang Haizhen Zhou

  2. Content • 1. Introduction • 2. China’s Insurance Market • 2.1 Market Size and Development • 2.2 Insurance Market Structure • 3. China’s Insurance Regulatory System • 4. Evolution of Insurance Regulation and Supervision • 4.1 Capital utilization regulations • 4.2 Solvency Regulation • 4.3 The Insurance Protection Fund • 4.4 Market Surveillance • 4.5 Disclosure and Consumer Protection • 5. New Perspectives of Insurance Regulation in China

  3. Introduction • A fast-developing market • An opening, modernizing regulatory system • A special Political-Economic Scheme • Why is China regulating Insurance Industry like this? • How should we study China’s Insurance Regulation • What is the future of China’s Insurance Regulation

  4. China’s Insurance Market • Rapid Growth Rate nominal insurance premiums increased from 460 million yuan in 1980 to 1.45 trillion yuan in 2010, an average annual premium growth rate of over 30%, compared to a nominal GDP growth rate of 16%.

  5. China’s Insurance Market • Still Un-Developed China ranked 61st in insurance density and 39th in insurance penetration among world economies in 2010.

  6. China’s Insurance Market • Relatively Concentrated In 2010 the non-life insurance HHI was 1850 and the HHI for life insurance was 1800. U.S. Department of Justice merger guidelines categorize markets with HHI greater than 1800 as “concentrated” (DOJ/FTC 1997).

  7. China’s Insurance Regulatory System People's Bank of China People's Bank of China People's Bank of China-Insurance Division Ministry of Finance China Insurance Regulatory Committee 2009 1949 1952 1979 1995 1998 The Insurance Law of People's Republic of China The New Insurance Law of People's Republic of China

  8. China’s Insurance Regulatory System

  9. Evolution of Insurance Regulation and Supervision • 4.1 Capital utilization regulations

  10. Evolution of Insurance Regulation and Supervision • 4.2 Solvency Regulation

  11. Evolution of Insurance Regulation and Supervision • 4.3 The Insurance Protection Fund

  12. Evolution of Insurance Regulation and Supervision • The trend of regulatory evolution: • Modernized • Internationalized • Consumer-based • “the regulators used to be the coaches of the industry, who are concerned with building the market; but in the new era, insurance regulators should act more like judges, whose efforts should change from market construction to market supervision” • -- Dingfu Wu, former president of CIRC, 2010

  13. New Perspectives of Insurance Reg. in China • 1. How should we position China’s Insurance Regulator? • Public Interest Theory (Social Planner) • Private Interest Theory (Rent Seeking, Capture or special interest?) • 2. Does the Regulator have Institutional Weakness? • Limited Regulatory Capacity • Limited Accountability • Limited Commitment • Limited Fiscal Efficiency

  14. Thank you!

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