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China tightens reporting rules for life insurers to improve liability management

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China tightens reporting rules for life insurers to improve liability management

The China Banking and Insurance Regulatory Commission tightened actuarial reporting rules for life insurers to strengthen their liability management and prevent financial risk.

In their actuarial reports, life insurers will be required to analyze the condition and major risks of their liabilities from areas including reserves, business development, asset liability management, cash flow stress test and embedded value.

The regulator said the new actuarial reporting rules will guide life insurers toward lower liability costs and "firmly hold the bottom line of liquidity risk."

In addition, the CBIRC also tightened the supervision of chief actuaries. The regulator said it will punish companies and individuals who falsify actuarial reports, severely mismatch assets and liabilities and cause significant liquidity risks.

New rules become effective immediately. Life insurers will need to submit annual actuarial reports by April 30, while 2017's annual actuarial reports should be submitted by Sept. 30.

The regulator has been beefing up its supervision of insurers, some of which in recent years invested in long-term projects or assets but were funded by short-term high-yield products, exacerbating the liability mismatch and posing risk to the financial system.