insurance

China’s top insurance regulator said on Wednesday that it keeps a “positive yet prudent” attitude toward its insurers’ overseas investment, though China’s insurance premiums reached 3.1 trillion yuan ($450.8 billion) last year, which is likely to surpass Japan as the world’s second largest insurance market.

insuranceXiang Junbo, chairman of the China Insurance Regulatory Commission (CIRC), along with three CIRC vice-chairpersons, attended a press conference held by the State Council Information Office of the People’s Republic of China .

Great progress has been made in regulation and reform of the insurance sector last year, Xiang said. “First, we have tightened the lawful supervision in an all-round manner; second, the last line of preventing risks was firmly held; and third, we have served the big picture of national development,” Xiang said.

China’s premium income reached 3.1 trillion yuan in 2016, showing a 27.5 percent year-on-year growth. The increase offers China a chance to replace Japan as the second-largest premium income country after the US.

Moreover, the volume of agricultural insurance has expanded from 5.18 billion yuan in 2007 to 41.71 billion yuan in 2016, ranking also second only to the US.

Xiang added that the commission would give higher priority to risk prevention this year so that the insurance business could better serve social and economic development.

Chen Wenhui, a vice-chairman of the CIRC, while answering a question raised by Reuters on overseas investment, said that as a regulatory department, the CIRC stays positive yet prudent toward this subject.

Speaking of the positive side, the amount of useable money in the insurance industry is quite huge and global resource allocation is becoming more important, said Chen.

In the meantime, Chen pointed out that China’s overseas equity investment is still at the exploration stage. “Different legal, political and cultural environment could all bring potential risks. The talent reserve for overseas investment is also insufficient. That is why China is also prudent in the matter,” he explained.

By the end of December 2016, the balance of overseas investment of China’s insurance industry was $49.21 billion, accounting for 2.33 percent of the total assets in the previous quarter, said Chen, adding that it still leaves great space to trigger the regulation limit, which is 15 percent.

The distribution of China’s overseas assets also shows a prudent dynamic, the vice-chairman pointed out, adding that the market entities are mostly developed countries or regions such as the US, the UK, Australia and Hong Kong while bank deposit, bonds, stock share and funds in the open market are the main investment products.

Such investment accounts for 53.4 percent and investment in foreign stocks and immoveable property makes up 44.9 percent, he said.

In the next stage, the CIRC would continue the positive yet prudent attitude and encourage insurance agencies to carry out resource allocation on the global stage, said Chen. “Insurance agencies first need to strengthen capacity-building for overseas investment and we will also step up the supervision and regulation,” he noted.

By Qiang Wei from People’s Daily /NewsGhana.com.gh

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