April 19, 2017

CIRC announces planning for C-ROSS Phase II

At a national "solvency regulation" working meeting convened by the China Insurance Regulatory Commission (CIRC) on 11 April 2017, CIRC Deputy Chairman Chen Wenhui highlighted four key risks currently faced by China's insurance sector, including:

  1. Solvency adequacy;
  2. Cash-flow management;
  3. Internal governance failings; and
  4. Cross-border risk transfer.

In response to the four key risks highlighted above, CIRC has now initiated work on phase two of the China Risk Orientated Solvency System (C-ROSS#2).  C-ROSS#2 will see three new key developments:

A. Implementation of a new solvency supervisory regime;

B. Consequent amendment of the current C-ROSS solvency supervisory regime; and

C. Strengthening and tighter co-ordination of supervisory implementation.

The aim of C-ROSS#2 will be to regularize and rectify what is now perceived to be the sloppy management of solvency by the insurance sector in China.

There was no mention by Deputy Chairman Chen as to when C-ROSS#2 may be implemented.