The Study On Assessment Of Systemically Important Insurers In China

Systemically important insurers are the insurance agencies which refer to a certain geographical area, have huge asset size and complex business, and have broad correlation with other financial institutions, and its collapse would cause huge risk spillovers which will give the region’s financial system and even physical economy serious negative impact. So it is considered as "stabilizer" of the global insurance industry, and assumes important functions in the financial markets. Therefore, scientific recognizing Systemically Important Insurers is very important to enhance the soundness of the insurance system, to maintain financial stability and even the entire national security. The question of the paper is:with reference to assessment methods and regulatory requirements which the Financial Stability Board, the Basel Committee and the International Association of Insurance Supervisors and other relevant international regulatory bodies did for systemically important financial institutions and Systemically Important Insurers, it assesses China’s Systemically Important Insurers and puts forward its regulatory proposals.This paper consists of five parts. The first part is an introduction which introduces the research background and significance of this paper, and defines the related concepts. The second part, from the assessment methods and regulatory policies of both domestic and foreign, introduced the research of systemically important financial institutions. The third part assessed the Systemically Important Insurers in china. In this part, Ping An, China Life, PICC, NCI, China Re, CPIC, Pacific Insurance, CHINA TAPING, Huatai Insurance Group and Sunshine Insurance are selected for study samples. According to the G-SII assessment methods, it selects10sub-indicators from scale, interconnectedness, non-traditional and non-insurance activities, and substitutability areas, to establish a comprehensive index system which is suitable for China, and using the index system to measure the importance of the system and sorted for the nine insurance companies, the results show China Ping An Insurance Group’s systemic importance is much higher than the other eight insurance agencies, and the score is0.4303, followed by China PICC and China Life Insurance, scores were0.2813and0.1063, which is reason why the China Ping An become the only one Chinese insurance agencies to enter the global systemically important insurance. We also found that, unlike the importance of the banking system, the scale is not a key indicator of systemic importance for insurance agencies. Then using cluster analysis to classify the various insurance agencies, I found that China Ping is the first category, China Life Insurance is the second category, and other insurance agencies is the third category, corresponding to a high degree of systemic importance, medium and low categories. This conclusion provides a strong basis for the insurance regulatory bodies to implement different management for Chinese systemically important insurance agencies. The forth part, in reference to global systemically important insurers assessment methods and policy framework proposals published by IAIS, this paper pointed out that it is not only necessary to establish a comprehensive index system for china, but also to research market method to aid the index method for accurately identify the systemic importance of insurance agencies, which make good prepare for supervision of systemically important of insurance agencies. On the regulatory side, this paper pointed out that the China Insurance Regulatory Commission should strengthen supervision and information disclosure, effective disposal and other aspects of the system requirements to make clear the importance of insurance institutions and the implementation of differential regulation. The fifth part is the conclusion part, which elaborated the meaning of this study achieved in theory and practice.Assessing the Systemically Important Insurers is a new complicated topic. The contribution of this paper is:According to the "Final G-SIIs Policy measures18July2013" recently issued by International Association of Insurance Supervisors, combining the characteristics of China’s insurance agency, from the scale, interconnectedness, non-traditional and non-insurance activities and substitutability four aspects, this paper build a more comprehensive evaluation index system of domestic systemically important insurance institution, and made some tentative qualitative analysis which has a certain conclusion. However, due to the limitations of the method itself, poor data quality and insufficient capacity of mine, this paper can not guarantee to fully recognize the Systemically Important Insurers in China.