Industry News | Promote the high-quality development of the insurance industry and contribute to the construction of Chinese-style modernization

Promoting the high-quality development of the insurance industry and promoting the construction of Chinese path to modernization -- Li Yunze's keynote speech at the opening ceremony of the 15th Lujiazui Forum

Li Yunze

(June 19, 2024)

Dear Secretary Chen Jining and Mayor Gong Zheng,

Dear President Xie Zhizhen,

Dear Vice Director Wang Jiang, President Pan Gongsheng, Chairman Wu Qing, and Director Zhu Hexin,

Dear guests, ladies and gentlemen, and friends:

Good morning everyone!

I am delighted to participate in the 15th Lujiazui Forum. Currently, the world economic situation remains complex and complex, and stable growth faces many challenges. The theme of this forum, "Promoting World Economic Growth through High Quality Financial Development," has strong practical significance and will undoubtedly gather greater consensus and wisdom to promote world economic recovery.

When the last Lujiazui Forum was held, the State Administration of Financial Supervision had just been listed. The institutional reform of the General Administration system has been steadily implemented, the "four level vertical management" regulatory framework has been officially formed, the construction of regulatory systems has been comprehensively accelerated, the reform of small and medium-sized financial institutions has been orderly promoted, risks in key areas have gradually converged, the quality and efficiency of financial services for the real economy have continued to improve, and high-level opening up to the outside world has further expanded. The achievement of these achievements cannot be achieved without the strong support of relevant departments in various regions, as well as the care and help of all sectors of society! On behalf of the State Administration of Financial Regulation, I would like to express my sincere gratitude!

Ladies and gentlemen, friends!

Since the beginning of this year, China's economic growth rate has continued to maintain a leading position among major economies in the world, demonstrating a stable foundation, new vitality, great potential, and strong resilience. The basic trend of China's long-term economic growth has not changed, and the factors supporting high-quality development have not changed. The Chinese economy remains an important engine for stable global economic growth. Economic prosperity and financial prosperity; Financial stability and economic stability. Banking, securities and insurance are all important forces to promote economic and social development. Each has its own strong points, and each will certainly show its own strong points in the process of achieving Chinese path to modernization. Shanghai is the birthplace of China's modern insurance industry, witnessing the great changes and vicissitudes of China's insurance industry over the past century. I would like to take this opportunity to make three preliminary remarks on how the insurance industry can better serve Chinese path to modernization.

1、 The insurance industry is promising for Chinese path to modernization

The 20th CPC National Congress has drawn a grand blueprint for comprehensively promoting the great rejuvenation of the Chinese nation with Chinese path to modernization. Insurance, as a fundamental institutional arrangement of modern market economy, connects various industries and is related to national economy and people's livelihood. It is a powerful means to promote economic development, improve people's livelihood security, and contribute to common prosperity. Insurance originates from mutual assistance and risk sharing, embodying the concept of "everyone for me, I for everyone", which naturally aligns with the people-oriented nature of financial work. In the process of comprehensively building a socialist modernized country, the insurance industry is facing a historic opportunity for high-quality development and will play an irreplaceable role.

One is to build a strong economic safety net, which requires high-quality development of the insurance industry. Improving economic resilience, enhancing market vitality, and hedging against cyclical impacts cannot be achieved without a strong modern insurance industry. From the perspective of financial structure, insurance assets only account for 7% of the total assets of China's financial industry, while the international average is around 20%. Accelerating the development of the insurance industry is beneficial for improving the structure of the financial market, optimizing the allocation of financial resources, and enhancing the stability of the financial system. From the perspective of fund supply and demand, insurance funds have a long duration and cross cycle attributes. Strengthening insurance funds is beneficial for cultivating "patient capital", smoothing out economic cycle fluctuations, and promoting a virtuous cycle of "funds capital assets". From the perspective of protection scope, the connotation and extension of insurance protection are constantly expanding and enriching. Keeping up with the times and establishing a big insurance concept can better provide effective buffering and risk barriers for the stable operation of the economy.

The second is to build a solid social security network, which requires high-quality development of the insurance industry. Insurance is an important component of a multi-level social security system, which helps to fill the gaps in the field of people's livelihood, enhance the balance, stability, and sustainability of social security. In many countries around the world, the birth, aging, illness, and death of ordinary people are inseparable from insurance. Some people may not have the habit of saving money, but they generally purchase insurance. In the process of implementing the national strategy of Healthy China and addressing population aging, the people's demand for care for the elderly, medical care for the sick, and assistance for the weak is constantly increasing, and diversified insurance protection needs are accelerating their release. The scale of China's middle-income group continues to expand, with a high savings rate for residents. The development of pension and health insurance has obvious advantages and broad prospects.

The third is to build a strong disaster prevention network, which requires high-quality development of the insurance industry. China has a vast territory, a complex and diverse natural environment, and is prone to various types of disasters. From natural disasters such as earthquakes and typhoons to safety accidents in construction, transportation, and other fields, the insurance industry can effectively reduce the loss of people's lives and property and improve the overall risk resistance of the whole society by diversifying risks, timely settling claims, and promoting prevention. From the global average level, about 40% of the compensation for major disaster accidents is borne by the insurance industry, while in China, this proportion is only about 10%. The insurance industry has the potential and ability to play a greater role in improving the national emergency protection system.

2、 Identify the focus of insurance industry for Chinese path to modernization

If the insurance industry wants to make great achievements in an era of great promise, it must consciously integrate into the overall situation of Chinese path to modernization with a sense of mission and responsibility that the time is not waiting for, return to the source, focus on the main business, strive to write the insurance chapter of "five major articles", and effectively play the role of economic shock absorber and social stabilizer.

One is to focus on innovative development and provide precise and efficient services for new quality productivity. The notable feature of new quality productivity is innovation. We will promote the insurance industry to focus on achieving high-level technological self-reliance and self-improvement, and accelerate the improvement of the insurance product system covering the entire lifecycle of technology enterprises. Improve the insurance compensation policy mechanism for the first unit (set) and first batch, and better leverage the role of integrated circuit co insurers. Increase insurance funds to support strategic emerging industries, advanced manufacturing, new infrastructure, and entrepreneurial investment. Improve the evaluation mechanism for green finance, promote the "willingness to protect as much as possible" of new energy vehicles, and encourage insurance institutions to strengthen risk protection and financial support for green industries, green consumption, and other aspects.

The second is to focus on people's well-being and better meet the needs of the people for a better life. At present, agricultural insurance provides insurance protection for 164 million households, and the coverage of major illness insurance reaches 1.2 billion people. The insurance industry has accumulated over 6 trillion yuan in pension reserves and over 2 trillion yuan in long-term health insurance liability reserves. We will accelerate the filling of the gaps in the third pillar, vigorously develop commercial insurance annuities, and better meet the needs of the people for pension security and wealth management. Actively develop commercial medical insurance, improve the coverage of commercial long-term care insurance, and promote the deep integration of health insurance and health management. Tailored insurance products for new citizens such as delivery drivers, ride hailing drivers, and flexible employment personnel. Actively promote the expansion, addition, and upgrading of agricultural insurance, fully implement the three major grain crop full cost insurance and planting income insurance policies, and effectively serve the rural revitalization strategy.

The third is to focus on safety emergency response and continuously promote the improvement of social governance efficiency. After the catastrophic flood disaster in Beijing, Tianjin, Hebei and other areas last year, the insurance industry made early and quick compensations, and made every effort to help the affected people and business entities overcome difficulties and restore normal production and life order as soon as possible. At the beginning of the year, the first comprehensive catastrophe insurance of all types in China was officially launched in Hebei. We will promote the improvement of a multi-party catastrophe insurance protection system, guide insurance institutions to leverage their professional advantages in risk management, and do a good job in pre disaster prevention, disaster reduction during the event, and post disaster relief. Accelerate the development of liability insurance in areas such as environmental pollution and food safety, strengthen the loss compensation and accident prevention functions of safety production liability insurance, solve social problems through market-oriented mechanisms, and help improve the level of public safety governance.

3、 Deepen reform and enhance the driving force for high-quality development of the insurance industry

At present, China's insurance industry is in the process of climbing and upgrading, inevitably encountering some difficulties and challenges. Overall, the insurance market in China has enormous potential and vast space. We have the conditions, confidence, and ability to increase vitality through reform, solve problems through development, and promote the insurance industry to create new situations and take new steps.

One is to effectively transform the development mode and promote the realization of cost reduction and efficiency increase. We will promote the insurance industry to adhere to connotation based development, distinctive operation, and refined management, accelerating the shift from pursuing speed and scale to value and efficiency as the center. Guide insurance institutions to establish correct business, performance, and risk perspectives, improve corporate governance mechanisms, accelerate digital transformation, and enhance operational management efficiency. Enrich product supply, improve guarantee services, and promote more suitable supply and demand. We will make great efforts to reform the sales system, carry out actions to improve the quality of insurance intermediaries, continue to promote the integration of reporting and banking, comprehensively deepen cooperation between banks and insurance, explore pilot projects for high-quality non bank financial institutions to act as insurance agents, and continuously improve the standardization, professionalism, and convenience of sales services.

The second is to deeply grasp the development laws and strengthen the linkage between assets and liabilities. Last year, we guided the adjustment of insurance product reserve interest rates and optimized solvency risk factors in response to common industry issues, achieving positive results. We will strengthen countercyclical regulation, improve solvency and reserve requirement regulations, and expand channels for capital replenishment. Promote insurance institutions to strengthen the overall coordination and linkage of assets and liabilities, and integrate it into all aspects of the entire business management chain. Further improve the pricing mechanism for insurance products, guide insurance institutions to adjust their product structure, and effectively prevent interest rate spread risk. Promote insurance institutions to adhere to long-term investment, prudent investment, and value investment, explore long-term assessments, and strive to build core competitiveness.

Thirdly, we will focus on consolidating the foundation of development and creating a favorable market environment. We will accelerate the promotion of sound financial rule of law, improve policy support systems, and study and issue guidance on promoting high-quality development of the insurance industry. Continuously optimize the layout of insurance institutions and accelerate the reform of high-risk institutions into insurance. Vigorously regulate market order and resolutely safeguard the legitimate rights and interests of financial consumers. Strengthen publicity and popularization, and enhance the insurance awareness of the whole society and the people. Guide insurance institutions to carefully care for the reputation of the industry, making honesty, trustworthiness, profit from righteousness, prudence, innovation, and compliance the code of conduct and conscious adherence of insurance practitioners, continuously improving people's satisfaction and sense of gain, and shaping a trustworthy, trustworthy, and warm image of the insurance industry.

Ladies and gentlemen, friends!

Opening up to the outside world is an important driving force for the reform and development of China's financial industry. We will adhere to the equal emphasis on "bringing in" and "going out", continue to create a first-class business environment, and resolutely expand the high-level opening up of the financial industry to the outside world. We will guide financial institutions to optimize cross-border financial services and deepen their integration into the high-quality joint construction of the "the Belt and Road". Steadily expanding institutional openness, researching and relaxing the scope of foreign shareholders for non bank financial institutions, encouraging qualified foreign institutions to participate in various business pilot projects, and supporting foreign institutions in China to deeply cultivate China and operate steadily. China has the most promising financial market in the world, and we sincerely welcome more foreign institutions and long-term capital to come to China for business development and achieve better and greater development.

Ladies and gentlemen, friends

Shanghai has always been at the forefront of the country's financial industry reform and opening up. One year ago, we officially launched the construction of the Shanghai International Reinsurance Registration and Trading Center here. In the near future, we will work with the Shanghai Municipal People's Government to issue implementation opinions on accelerating the construction of the Shanghai International Reinsurance Center. Actively exploring pilot investment of insurance funds in gold contracts and related products of the Shanghai Gold Exchange, relaxing restrictions on non resident M&A loans in the Lingang New Area, encouraging China Insurance Investment Corporation to better leverage the long-term investment function of insurance funds in Shanghai, and supporting more foreign financial institutions to land in Shanghai. In the future, we will promote more financial opening initiatives to take the lead in Shanghai, fully support the construction of Shanghai International Financial Center and the integrated development of the Yangtze River Delta, and give full play to the leading and exemplary role of Shanghai in promoting Chinese path to modernization.

Finally, I wish this forum a complete success!

Thank you all!

The above content is sourced from the Bank of China Insurance Report