Insurance company guideline to debut
(Xinhua)
Updated: 2005-06-26 08:58

China's insurance regulator has promised to draw up a supervision guideline as soon as possible to impel domestic insurance companies to optimize their corporate governance.

Wu Dingfu, chairman of the China Insurance Regulatory Commission (CIRC), said here Friday that the function ofdirectorates must be enhanced and standardized.

"A clarified relationship between directorates and managementbodies would prevent big shareholders from manipulating companiesand nibbling the interests of the insured," Wu said at aninternational workshop on the internal governance of insurancecompanies.

He also recognized the sector's achievements as all majorindigenous insurance companies have set up a management structureconsisting of shareholders' meetings, directorates, supervisorycommittees and management at various levels.

Independent directors have been introduced in nine majorinsurance companies such as the Ping'an Insurance and the NewChina Life Insurance, he said.

Some industrial analysts held that Chinese insurance authority 's increasing concern about corporate governance was triggered byrecent management scandals and company bankruptcies in the UnitedStates, Europe, Australia and Asia. Almost all securities andinsurance authorities, even courts, have started to think overtheir lapses.

"Compared with their western counterparts," said a top manager of a Chinese life insurance company on condition of anonymity, " most domestic insurance companies fave four problems in corporate governance, namely the control of shareholders' rights,independent directorates, out-of-date legal environment and poorcapability in risk control."

Given that government is the biggest shareholder of state-owned insurance companies, corporate managers often found themselvesunable to play the game fully in line with market rules and thusbecame less market-oriented, the manager explained.

Meng Zhaoyi, who heads the international department of CIRC,said that the commission will follow the supervision frameworkproposed by the International Association of Insurance Advisors in 2004 to tighten the management of corporate governance, companies' solvency and market behaviors.

"We will establish a clear-cut supervision system and clarifyour supervision methods based on the developing trend of the world 's insurance industry," he said.

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