Circular of the China Insurance Regulatory Commission on Issuing the Guidelines for the Determination of Product Rates of Property Insurance Companies
Circular of the China Insurance Regulatory Commission on Issuing the Guidelines for the Determination of Product Rates of Property Insurance Companies
Circular of the China Insurance Regulatory Commission on Issuing the Guidelines for the Determination of Product Rates of Property Insurance Companies
Bao Jian Fa [2017] No.2
January 5, 2017
All property insurance companies,
In order to strengthen the supervision and administration of the determination of product rates of property insurance companies, protect the interests of the insured, and promote the stable operation of such companies, the China Insurance Regulatory Commission (hereinafter referred to as the "CIRC") has formulated the Guidelines for the Determination of Product Rates of Property Insurance Companies, which are hereby issued to you for compliance and implementation.
Guidelines for the Determination of Product Rates of Property Insurance Companies
Chapter I General Provisions
Article 1 In order to strengthen the supervision and administration of the determination of product rates of property insurance companies, protect the interests of the insured, and promote the stable operation of such companies, the Guidelines for the Determination of Product Rates of Property Insurance Companies (hereinafter referred to as the "Guidelines") are hereby formulated in accordance with the Insurance Law of the People's Republic of China, the Basic Standards for Internal Control of Insurance Companies and the Administrative Measures for the Insurance Clauses and Premium Rates of Property Insurance Companies.
Article 2 For the purpose of these Measures, insurance companies refer to property insurance companies established within the territory of the People's Republic of China in accordance with the law, including Chinese-funded insurance companies, Sino-foreign insurance companies, wholly foreign-funded insurance companies, and branches of foreign insurance companies.
Article 3 For the purpose of these Measures, premium rates are the principles and methods for calculating premiums collected by insurance companies for undertaking insurance liability. Rates determination referred to herein applies to rates determination for insurance products subject to examination and approval and rates determination for insurance products subject to record-filing.
Article 4 Rates are important components of insurance products. Insurance companies shall follow non-life insurance actuarial principles and methods and determine rates in a scientific manner under the principle of reasonableness, fairness and sufficiency.
Article 5 Insurance companies shall establish internal recycling control procedures featuring ex ante preparation, in-process calculation and ex post supervision and adjustment in respect of the process of rates determination.
Article 6 An insurance company shall establish an effective rates management mechanism under which the rates determination by the management, and actuarial, financial, underwriting, settlement of claims, and information technology departments, and other relevant functional departments shall be subject to hierarchical authorization, clear rights and obligations, division of labor and interaction.
The general manager of an insurance company is responsible for the authenticity of the basic data on rates determination and the design, implementation, maintenance and supervision of the internal control system of rates determination, and shall bear ultimate liability for rates determination results.
The chief actuary or person in charge of actuarial services of an insurance company shall ensure that the basic data, actuarial method, actuarial assumption and actuarial model used in rates determination are in line with the actuarial principles and the relevant provisions of these Measures, and shall ensure reasonable, fair and sufficient rates determination results.
Chapter II Composition of Rates
Article 7 Product premiums include risk premium and additional premium.
1. Risk premium, also known as pure premium, refers to the premium collected by an insurance company to pay the expected insurance compensation.
2. Additional premium refers to the premium collected by an insurance company to, among others, meet the risk management requirements, pay operation and management fees, and gain normal profits. Additional premium includes expense addition, risk addition and profit addition, etc.
(1) Expense addition refers to expense costs incurred by an insurance company for securing and maintaining insurance policies, performing insurance liability and carrying out other operation and management acts.
(2) Risk addition refers to the cost to be borne by an insurance company due to the uncertainty that the actual compensation amount may be higher than the risk premium.
(3) Profit addition refers to the expected profit of an insurance company from selling insurance products.
Article 8 Premium rates are composed of base premium rates and rates adjustment coefficient. Base premium rates determined include pure risk loss ratio and additional rates where pure risk loss ratio refers to the ratio of risk premium to risk exposure, and additional rates refer to the ratio of additional premium to the overall premium.
Chapter III Principles of Rates Determination
Article 9 An insurance company shall follow the principle of reasonableness in determining rates.
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Bao Jian Fa [2017] No.2
January 5, 2017
All property insurance companies,
In order to strengthen the supervision and administration of the determination of product rates of property insurance companies, protect the interests of the insured, and promote the stable operation of such companies, the China Insurance Regulatory Commission (hereinafter referred to as the "CIRC") has formulated the Guidelines for the Determination of Product Rates of Property Insurance Companies, which are hereby issued to you for compliance and implementation.
Guidelines for the Determination of Product Rates of Property Insurance Companies
Chapter I General Provisions
Article 1 In order to strengthen the supervision and administration of the determination of product rates of property insurance companies, protect the interests of the insured, and promote the stable operation of such companies, the Guidelines for the Determination of Product Rates of Property Insurance Companies (hereinafter referred to as the "Guidelines") are hereby formulated in accordance with the Insurance Law of the People's Republic of China, the Basic Standards for Internal Control of Insurance Companies and the Administrative Measures for the Insurance Clauses and Premium Rates of Property Insurance Companies.
Article 2 For the purpose of these Measures, insurance companies refer to property insurance companies established within the territory of the People's Republic of China in accordance with the law, including Chinese-funded insurance companies, Sino-foreign insurance companies, wholly foreign-funded insurance companies, and branches of foreign insurance companies.
Article 3 For the purpose of these Measures, premium rates are the principles and methods for calculating premiums collected by insurance companies for undertaking insurance liability. Rates determination referred to herein applies to rates determination for insurance products subject to examination and approval and rates determination for insurance products subject to record-filing.
Article 4 Rates are important components of insurance products. Insurance companies shall follow non-life insurance actuarial principles and methods and determine rates in a scientific manner under the principle of reasonableness, fairness and sufficiency.
Article 5 Insurance companies shall establish internal recycling control procedures featuring ex ante preparation, in-process calculation and ex post supervision and adjustment in respect of the process of rates determination.
Article 6 An insurance company shall establish an effective rates management mechanism under which the rates determination by the management, and actuarial, financial, underwriting, settlement of claims, and information technology departments, and other relevant functional departments shall be subject to hierarchical authorization, clear rights and obligations, division of labor and interaction.
The general manager of an insurance company is responsible for the authenticity of the basic data on rates determination and the design, implementation, maintenance and supervision of the internal control system of rates determination, and shall bear ultimate liability for rates determination results.
The chief actuary or person in charge of actuarial services of an insurance company shall ensure that the basic data, actuarial method, actuarial assumption and actuarial model used in rates determination are in line with the actuarial principles and the relevant provisions of these Measures, and shall ensure reasonable, fair and sufficient rates determination results.
Chapter II Composition of Rates
Article 7 Product premiums include risk premium and additional premium.
1. Risk premium, also known as pure premium, refers to the premium collected by an insurance company to pay the expected insurance compensation.
2. Additional premium refers to the premium collected by an insurance company to, among others, meet the risk management requirements, pay operation and management fees, and gain normal profits. Additional premium includes expense addition, risk addition and profit addition, etc.
(1) Expense addition refers to expense costs incurred by an insurance company for securing and maintaining insurance policies, performing insurance liability and carrying out other operation and management acts.
(2) Risk addition refers to the cost to be borne by an insurance company due to the uncertainty that the actual compensation amount may be higher than the risk premium.
(3) Profit addition refers to the expected profit of an insurance company from selling insurance products.
Article 8 Premium rates are composed of base premium rates and rates adjustment coefficient. Base premium rates determined include pure risk loss ratio and additional rates where pure risk loss ratio refers to the ratio of risk premium to risk exposure, and additional rates refer to the ratio of additional premium to the overall premium.
Chapter III Principles of Rates Determination
Article 9 An insurance company shall follow the principle of reasonableness in determining rates.
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