The heads of relevant departments and bureaus of the State Administration of Financial Supervision answered reporters’ questions on the “Regulations on the Development and Management of Insurance Products of Property Insurance Companies”

Recently, the State Administration of Financial Supervision issued the "Regulations on the Development and Management of Insurance Products of Property Insurance Companies" (hereinafter referred to as the "Regulations"). A few days ago, the heads of relevant departments and bureaus of the State Administration of Financial Supervision answered reporters’ questions on relevant issues.

1. What is the background for the promulgation of the Regulations?

In order to improve the insurance product supervision system and standardize the insurance product development behavior of property and casualty insurance companies, the former China Insurance Regulatory Commission issued the "Guidelines for the Development of Insurance Products for Property and Casualty Insurance Companies" (hereinafter referred to as the "Development Guidelines") and came into effect on January 1, 2017. As a core normative document for product supervision of property and casualty insurance companies, the "Development Guidelines" refine the specific requirements for product management and form an effective supplement to the departmental regulations "Measures for the Management of Insurance Terms and Premium Rates of Property and Casualty Insurance Companies".

In recent years, with the rapid development of my country's property insurance market, the coverage of insurance products has been continuously expanded and the protection content has been continuously enriched. However, there have also been problems such as the high proportion of additional insurance products but the lack of detailed rules, the management and application of industry model clauses and pure risk loss ratios need to be strengthened, and the standards for company product evaluation revision and cleanup and cancellation need to be further refined. In order to further standardize the insurance product development reporting behavior of property and casualty insurance companies, refine and improve regulatory requirements, improve the quality and efficiency of product supervision, and enhance the protection of the rights and interests of insurance consumers, the "Development Guidelines" are revised and improved, and simultaneously renamed as the "Provisions on the Management of Insurance Product Development of Property and Casualty Insurance Companies" (hereinafter referred to as the "Regulations"), to provide clear requirements and clear standards for industry product development. It serves as an important measure for the comprehensive management of property insurance and non-auto insurance, and an important starting point for strong supervision and strict supervision.

2. What core requirements does the "Regulations" put forward in regulating product development and protecting consumer rights and interests?

The "Regulations" will strengthen product supervision, standardize development management, and protect consumer rights and interests throughout. The first is to stick to the origin of insurance. It is clear that the development of insurance products must comply with the principles of insurance interests, loss compensation, good faith, luck contracts and risk pricing, etc. It is prohibited to develop insurance products that do not have probabilities, cover speculative risks, have no actual protection content, or are purely for the purpose of malicious speculation and violate social order and good customs. The second is to strengthen standards and regulations. It is required that the expression of clauses should be standardized and standardized, and that individual clauses should be easy to understand, clear and unambiguous. Contents that exempt or reduce the liability of the insurer should be prompted in a way that is sufficient to attract the attention of the policy holder, so as to effectively protect consumers' right to know. The third is to strictly manage responsibilities. Elaborate and clarify the product development management responsibilities that each level of the company should bear, and require property and casualty insurance companies to establish internal accountability mechanisms to urge companies to develop products prudently. The fourth is to strengthen continuous supervision. Insurance companies are required to evaluate product compliance and adaptability, make timely adjustments or stop selling products that are not suitable for continued sale, and strengthen full-process management of products.

3. What are the considerations behind setting up a special chapter to regulate the development and management of additional insurance in the Regulations?

As a supplement to the main insurance, the purpose of additional insurance is to maintain the stability of the main insurance while appropriately increasing its flexibility, so as to provide insurance consumers with more comprehensive and targeted insurance protection. Additional insurance should have a strong correlation with the main insurance and expand, reduce or adjust the relevant content of the main insurance. In practice, some companies have the problem of designing clauses that are relatively independent in substance or not closely related to the main insurance as additional insurance, or even use additional insurance to revise the main insurance for errors. To this end, the "Regulations" set up a separate chapter on additional insurance to systematically clarify its definition, development purpose and necessity assessment requirements, and list the specific circumstances under which development is prohibited. The purpose is to guide the industry back to the original intention of developing additional insurance, ensure a clear product structure, clear responsibilities, and prevent clause conflicts, claims disputes or business compliance risks.

4. The Regulations put forward further requirements for the use of industry model clauses and benchmark pure risk loss rates. Please introduce relevant considerations.

The formulation and use of industry model terms and benchmark pure risk loss rates are important means to improve the standardization and normalization of industry terms and improve the accuracy and scientificity of pricing. The "Regulations" clarify that if there are industry model clauses or benchmark pure risk loss rates, each company should use them in principle. At the same time, it is proposed that for companies that are not used, the reasons and differences must be explained in the feasibility report or actuarial report. In this way, while respecting the company's differentiated business paths, it will strengthen the use efficiency of demonstration clauses and pure risk loss rates through detailed requirements, and promote the improvement of product quality in the entire industry.

5: What key requirements does the "Regulations" put forward in strengthening the main responsibility of product development management of property and casualty insurance companies?

Answer: The "Regulations" systematically consolidate the main responsibilities of the company's product development management from various aspects such as the company's product management levels, standards, processes and responsibilities. The company is required to set up a product management committee led by the main person in charge to review major matters regarding terms and rates development and management; at the same time, products with strong innovation, special business models or high underwriting risks will be included in the scope of review to more effectively cover risks. By clarifying the standard requirements for product evaluation, revision, cleanup and cancellation, and refining annual product reporting requirements, the company is urged to continuously improve the full-process product management system. We will refine the responsibilities of the company’s main person in charge, chief compliance officer, chief actuary, and product development management personnel at all levels, continue to strengthen product development management, and consolidate the responsibilities of the main body of the organization.