On 8 April 2018 the China Banking and Insurance Regulatory Commission (CBIRC) was formally unveiled in Beijing, marking the official launch of the new regulatory authority. This merger of the former China Banking Regulatory Commission (CBRC) and China Insurance Regulatory Commission (CIRC) is the biggest reform of China's financial regulatory system in more than 15 years. It brought an end to the 'one bank, three commissions' regulation framework and marks the start of the 'one committee, one bank, two commissions' regulation framework (referring to the Financial Stability and Development Committee, the People's Bank of China, the CBIRC and the CSRC). Although China now has a new insurance regulator, this significant development is incomplete, as it requires the reorganisation of not only the CBRC and the CIRC, but also their local branches, which will take longer.
Guo Shuqing, former chair of the CBRC, is the inaugural chair of the CBIRC.
One of the CBIRC's previous seven vice chairs, former CIRC vice chair Chen Wenhui, was recently transferred to the National Council for Social Security Fund. According to the CBIRC's official website, its vice chairs are:
- Wang Zhaoxing;
- Huang Hong;
- Cao Yu;
- Zhou Liang;
- Liang Tao; and
- Zhu Shumin
Li Xinran is head of the commission's discipline inspection team.
According to the State Council's announcement, the CBIRC comprises a number of departments which are responsible for various insurance and banking activities. This article discusses the main departments which oversee insurance matters.
General administration department
The general administration department is responsible for the CBIRC's daily operations, including:
- security;
- drafting letters and arranging visits;
- confidentiality;
- government transparency;
- the dissemination of information; and
- marketing.
Policy research bureau
The policy research bureau:
- researches and implements reform and opening-up policies for the insurance industry;
- researches domestic and international economic and financial situations and the development, reform and operation of insurance supervision; and
- implements recommendations on insurance supervision.
Legal department
The legal department drafts laws and rules for the insurance industry, as well as related supervisory regulations. It also conducts legal reviews and is responsible for administrative reconsideration, conducting a legal defence and responding to penalties.
Statistical information and risk monitoring department
The statistical information and risk monitoring department is responsible for monitoring statistics and preparing and disclosing regulatory statements. It also analyses and detects early risks affecting the insurance industry and is responsible for information security and IT risk supervision among insurers.
Finance and accounting department
The finance and accounting department manages the CBIRC's financial work and develops and reports on its budget and annual financial accounts. It also maintains a solvency supervision indicator system and supervises the use of insurance protection funds.
Financial inclusion affairs department
The financial inclusion affairs department promotes insurance-related financial inclusion affairs and formulates and implements related policies and rules. It also guides the financial services offered by insurers to small and medium-sized companies, rural branches and special groups.
Corporate governance supervision department
The corporate governance supervision department:
- formulates supervision regulations for the governance of insurers;
- supervises equity management and corporate governance; and
- leads efforts to strengthen equity management, regulate shareholder behaviour and improve corporate governance.
Non-bank financial institutions supervision department
The non-bank financial institutions supervision department formulates and implements on-site inspection plans for non-bank financial institutions. It also evaluates inspections and offers suggestions regarding correctness, supervision and penalties.
Major risk events and case management department
The major risk events and case management department:
- formulates the investigative procedures for rule and law violations;
- leads investigations into major or cross-region risk or violation cases; and
- guides and inspects insurers' security work.
Innovative business supervision department
The innovative business supervision department supervises and guides insurers' asset management business and develops new supervision measures for emerging businesses.
Consumer rights protection department
The consumer rights protection department:
- formulates plans and measures for consumer rights protection;
- investigates violations of consumer rights; and
- addresses consumer complaints.
Combating illegal financial activities department
The combating illegal financial activities department monitors illegally established financial institutions or businesses operating without a licence. It also identifies and investigates illegal fundraising and transfers such cases to the relevant department.
International cooperation and foreign-invested institution supervision office (Hong Kong and Macau Special Administrative Regions and Taiwan)
This office is responsible for international affairs and cooperation, as well as Hong Kong, Macao and Taiwan affairs. It also:
- manages the admission of foreign-owned insurers to the market;
- conducts off-site supervision, risk analysis, grading and on-site investigations based on risk supervision requirements; and
- formulates and implements measures addressing risk supervision and market exit in individual cases.
Property insurance supervision (reinsurance supervision) department
The property insurance supervision (reinsurance supervision) department:
- manages the admission of foreign-owned property insurers to the market;
- conducts off-site supervision, risk analysis, grading and on-site investigations based on risk supervision requirements; and
- formulates and implements measures addressing risk supervision and market exit in individual cases.
Personal insurance supervision department
The personal insurance supervision department performs the same activities as above with regard to personal insurance.
Insurance intermediaries supervision department
The insurance intermediaries supervision department:
- manages the admission of insurance intermediary institutions to the market;
- formulates the code of conduct and requirements for insurance intermediary practitioners; and
- manages insurance intermediary institutions' behaviour and investigates and penalises rule violations.
Insurance fund investment supervision
The insurance fund investment supervision department:
- establishes risk assessment, early warning and supervision systems for insurance funds investment;
- manages the admission of insurance fund investment institutions;
- conducts off-site supervision, risk analysis, grading and on-site investigation based on risk supervision requirements; and
- formulates and implements measures addressing the risk supervision and market exit of individual cases.
Personnel department (organisational department of Communist Party Committee)
The personnel department drafts and develops rules and regulations for HR management and oversees cadre education and training.
CBIRC Headquarters CPC Committee
This committee is responsible for the CBIRC's relations with the Communist Party.
According to comments from Xu Zhong, head of the People's Bank of China's research department, the merger of the CBRC and the CIRC into the CBIRC aims to:
- improve the efficiency and coordination of financial regulation in China; and
- deal with the increasingly integrated nature of its finance sector and the overlap between banking and insurance operations more effectively.
The CBIRC's specific market supervision departments (eg, the property insurance supervision department, the personal insurance supervision department and the insurance intermediaries supervision department) will oversee not only concrete market behaviours, but also licence applications and the governance structure of insurers (some governance structure matters are handled together with the corporate governance supervision department). Before the reorganisation, the insurance licence application and some governance structure matters were handled by the CIRC's development and reform department, which was considered the CIRC's most important department. However, it is not included in the list of CBIRC departments.
In addition, before the reorganisation, some parties claimed that there would be no insurance fund investment supervision department. The contradictory reality stresses the importance of insurance funds and showcases their uniqueness compared with banking assets.
The innovative business supervision department has also attracted attention; this new department underlines the Chinese regulators' tendency to support innovation and reform in the financial sector.
Finally, the CIRC's international department has been transformed into the international cooperation and foreign-invested institution supervision department, which is responsible for the regulation of foreign-invested insurers and intermediaries. This department demonstrates that the new dual regulation system – which separates the regulation of domestic and foreign-invested insurance entities – will likely exist for some time.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
