China's National Financial Regulatory Administration has issued the Insurance Company Regulatory Rating Measures, setting out a unified framework for assessing insurers’ risk profiles and using the results to drive differentiated supervision. The regime applies to insurers established in China that have operated for at least one full accounting year, and the rating outcome is positioned as a key input into supervisory measures, market entry decisions and onsite inspection planning. The scope covers insurance group (holding) companies, property insurers, life insurers, reinsurers and branches of foreign reinsurers; newly established insurers may be subject to trial ratings, while firms under restructuring, takeover or market exit are directly classified as S and do not participate in the annual rating process. The measures set out annual procedures (including planning, information collection, initial and review ratings, approval, feedback and analysis, dynamic adjustments and follow-up improvements) and target completion of each year’s rating work by the end of March of the following year, with a longer timeline envisaged during the initial rollout. Ratings are based on weighted, 100-point scoring across factors including corporate governance, solvency, liability quality, asset quality (including asset-liability matching), information technology, risk management, operating conditions and consumer protection, with scope for differentiated elements by insurer type; scores map to grades 1 to 5 (higher number indicates higher risk) plus S, with grade 2 split into A/B/C and grades 3 and 4 split into A/B. A “one-vote veto” mechanism requires downgrades where a single risk is deemed excessive, with examples including serious governance deficiencies, insufficient solvency or high liquidity risk leading to a rating of grade 4 or below. Use of results follows a “high risk, high intensity” approach: grades 1–2 may see reduced onsite inspection frequency and support in areas such as approvals and business pilots, grade 3 may trigger more frequent offsite analysis and required risk management improvement plans, grade 4 may lead to limits on dividends, branch expansion or business scope, and grade 5 requires a risk disposal plan that may include restructuring, takeover or market exit. For S-rated firms, the measures call for accelerating restructuring or exit processes in accordance with law.
China Banking and Insurance Regulatory Commission 2025-01-17
China's National Financial Regulatory Administration issues insurance company supervisory rating measures with 1–5 and S grades tied to supervisory actions
China's National Financial Regulatory Administration has introduced the Insurance Company Regulatory Rating Measures, creating a unified framework to assess insurers' risk profiles for differentiated supervision. Applicable to insurers in China operating for at least one year, ratings influence supervision, market entry, and inspections. The 100-point system includes a "one-vote veto" for excessive risks, determining supervisory intensity and potential restructuring or exit for high-risk firms.