Five out of the 170 insurers that were surveyed by the China Insurance Regulatory Commission are encountering issues with their solvency, the authority revealed on Tuesday.
China’s insurance regulations state that insurance companies must have solvency rates at above 100%, and those which fall short of the requirements will be subjected to penalties towards their scope of business and financing activities.
Amid the regulatory shakeup affecting the Chinese insurance industry, the low number of insurers stricken by solvency issues is a bright spot. This year’s results are an improvement from the 10 life insurance firms and one property insurance firm reported as at risk in last year’s survey, reported
Caixin.
The
CIRC added that comprehensive solvency ratio for the industry was at 238% at the end of the first quarter of 2017, compared to 247% at the end of 2016. While there was a slight decrease, it is well above the 100% threshold.
The industry’s core solvency margin was at 221%, also well above the 50% limit set by the regulator.
Meanwhile, the industry’s real capital totalled RMB3.4 trillion (US$493.47 billion) at the end of March, an increase of RMB189.9 billion from the start of the year, CIRC said. The watchdog said that the challenges the industry faces are “generally controllable” but risk prevention is complicated and risks must not be underestimated.
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