The China Insurance Regulatory Commission ("CIRC") has recently issued the Plan for the Second Phase Development of the China Risk Oriented Solvency System (C-ROSS) (the "Plan").
The Plan lays down 26 specific tasks surrounding three major missions, including improving regulatory rules, refining the operating mechanism and strengthening regulatory cooperation. The Plan expressly states that efforts will be made to amend and improve the Administrative Provisions on the Solvency of Insurance Companies, and optimize the Integrated Risk Rating (IRR) system and the Solvency Aligned Risk Management Requirements and Assessment (SARMRA) system; existing issues and institutional drawbacks, such as insufficient paid-in capital of insurance companies, complicated associated-party transactions, false statements of assets, unclear underlying assets caused by the multilayer nesting, unclearly defined products, irrational acquisition of listed companies' shares, prominent partial liquidity risks, inadequate effects of insurance security functions, will be tackled with particular efforts; and a mechanism will be established to assess and supervise third-party agencies in connection with the prudent regulation in the insurance sector, such as accounting firms, actuarial consultancies, assets apprising institutions, and credit rating agencies. Furthermore, the Plan notes that it will take around three years to push for the all-around completion of the C-ROSS development before putting it into place.