Industry News | Xiao Yuanqi, Vice Chairman of the China Banking and Insurance Regulatory Commission: Insurance companies must focus on guaranteeing their main business and transform from risk equalization management to risk reduction services

On September 3, the 2022 China Insurance Industry High Quality Development Forum was held in Beijing. At the forum, Xiao Yuanqi, vice chairman of the China Banking and Insurance Regulatory Commission, said that my country is already the second largest insurance market in the world, with total industry assets close to 27 trillion yuan, and the main indicators remain within a reasonable range. At present, the entire insurance industry has sufficient solvency, stable operation, Risks are completely controllable, and service and guarantee capabilities are continuously improved.

Vice Chairman of China Banking and Insurance Regulatory Commission Xiao Yuanqi

Specifically, Xiao Yuanqi gave five suggestions:

First, insurance companies must meet the real needs of customers on the liability side, and adhere to prudent operations on the asset side. my country's insurance density is 3,179 yuan per person, which is 6% of North America, 16% of EU, and 3.9% of insurance penetration, which is one-third of North America and one-half of EU. The market has great potential for development. Insurance companies must be customer-centric, analyze and understand what kind of insurance products and insurance services customers need. Insurance supply must be able to directly and meet the real needs of customers, rather than relying on marketing or raising channel fees. Only when the needs of customers are truly met can insurance operations be sustainable and the quality of insurance liabilities truly guaranteed. Insurance is priced based on actuarial laws and the law of large numbers. The premium income collected in the current period depends on asset management to defend against future expenditures. Insurance companies must be prudent and prudent in investment and operation, especially for life insurance companies with long liabilities and uncertain business operations. There are many factors, and the choice of risk preference should be relatively lower, and there must be no chance of "as long as there is insurance premium injection, there will be no problem".

Second, insurance companies must closely focus on the main business, and the non-main business must be a supplement and enhancement to the main business. The essence of insurance is mutual assistance, and risk protection is always the most basic and important function, and it is the most fundamental feature that distinguishes insurance from other financial industries. Insurance companies must focus on the main business of protection, transform from risk equalization management to risk reduction services, and provide customers with a package of protection solutions. No company should think that it is omnipotent. The insurance industry, like other industries, is interlaced like mountains, and similarities may not be bypassed. Due to the wide investment scope of insurance funds, it is easy to get involved in unfamiliar fields, and it is easy for some companies to have the illusion of omnipotence, which is also the risk of insurance companies. an important reason. Some insurance companies believe that diversification can generate "economies of scope", but this understanding is also very one-sided. Practice has proved that "economies of scope" are not completely suitable for the insurance industry. It is very dangerous to deviate from the main business, or even focus on customers. The upward and downward extension of the main business should be limited to the business areas that strengthen and consolidate the main business.

Third, insurance is an industry that requires slow work and meticulous work, and insurance companies must have the spirit of craftsmanship. Insurance has some special rules of operation. First of all, from customer demand, we understand that product development, actuarial determination, investment management, and claims settlement services are all interlinked chains. Any link takes a long time to work, and any problems will affect the smooth operation of the entire chain. Secondly, insurance is a highly specialized industry, and the professions required in different links are not exactly the same. It can be said that insurance is a combination of various professions. Thirdly, insurance products have a long term, span different periods, and change a lot in different periods, so they must be carefully designed and judged. These characteristics all determine that insurance must abandon short-term impulses, get rid of impatience, have the spirit of craftsmanship, be slower and more careful, and then can achieve stability and long-term success.

Fourth, insurance companies should segment the market and take the road of characteristic development. The insurance market is large and the needs are diverse. Except for a very few companies that can provide comprehensive insurance services, most companies cannot achieve "all-in-one coverage". They must segment the market and choose a characteristic business strategy according to their own resource endowments. Focus on specific customers, specific regions, specific products and specific businesses to enhance their core competitiveness and market influence. For example, my country's elderly population over the age of 60 has reached 264 million, and the pension insurance market is huge. How to tailor pension products for these people's pension needs and provide caring pension services that can meet their real needs is a major issue that the current insurance industry must answer seriously. If some insurance companies can really sink in in terms of pension insurance, understand the pension needs of the elderly, and work hard for a long time, they can not only create value for themselves, but also give full play to the unique advantages of insurance, serve the pension needs of the elderly well, and let the elderly People enjoy old age. In this way, the insurance industry can also achieve the perfect unity of economic value and social value.

Fifth, insurance companies must create a responsible and respected corporate culture. Insurance is a contractual act based on trust, a commitment to future uncertainty. Integrity is the basic principle and survival foundation of industry operation. The insurance industry should strive to shape a responsible and respected corporate culture, build consensus, stimulate motivation, and nourish practice. Responsibility is the premise. We must be responsible to the economy, and invest a large amount of long-term insurance funds in key areas to serve the real economy well. It is necessary to be responsible to the society, give full play to the advantages of industry actuarial technology and service network, assist in the construction of disaster prevention and mitigation and security systems, and promote social stability. It is necessary to be responsible to consumers, focus on addressing issues such as misleading sales and difficult claims settlement, improve the level of security, and reduce the financial burden caused by accidents, illnesses, and pensions. We must be responsible for the future, incorporate environment, society and governance into the entire business operation process and comprehensive risk management system, and be a financial enterprise that is respected by customers, employees, society and other stakeholders.

The above content is from China Banking Insurance News