China's banking and insurance regulator yesterday issued revised rules that tighten actuarial reporting standards for life insurance firms, part of efforts to improve supervision and risk control in the country's financial sector, reports Reuters.
The new rules require life insurance firms to tighten management of their liabilities, create a reporting system to cover asset and liability terms that facilitate linkage between the two and strengthen cash flow.
In recent years, a score of Chinese insurers have invested in long-term projects, funded by issuing high-yield, short-term universal life insurance.
The regulator has expressed concern that the sudden withdrawal of funds from such short-term universal life products could have an impact on insurer cash flow.
The rules also tighten the standards for hiring of chief actuaries, professionals who assess the probabilities of an event occurring among other things, on whose calculations insurance pricing is determined.