Guotai Junan: Industry resolves risks and develops high-quality in parallel, leading insurance companies benefit more.

Guotai Junan Securities released a research report stating that the "New National Ten Policies" are beneficial in guiding the insurance industry to achieve high-quality development on the basis of risk prevention. It is expected that the industry will go back to the basics and differentiated regulation will help leading insurance companies accelerate their high-quality development. In terms of development direction, the "New National Ten Policies" emphasizes the deep integration of products and services. Leading companies are taking the lead in laying out a product + service system, such as property insurance risk reduction management, the integration of pension insurance and pension services, and the integration of health insurance and health services, which are advantageous in seizing opportunities and gaining a competitive edge. Event: On September 11th, the State Council issued the "Several Opinions on Strengthening Supervision, Risk Prevention, and Promoting High-quality Development of the Insurance Industry," also known as the "New National Ten Policies." Comment: The purpose of the "New National Ten Policies" is to continue the direction set by the Central Financial Work Conference and to establish institutional requirements for promoting high-quality development of the industry based on the functional positioning of insurance. The Central Financial Work Conference of the Party pointed out the need to enhance the economic stabilizing and social stabilizing functions of the insurance industry, giving a clear functional positioning to the industry. As another important document guiding the development of the insurance industry at the national level after the "Ten Policies on Insurance Industry Reform and Development" in 2006 and the "New Ten Policies on Accelerating the Development of the Modern Insurance Service Industry" in 2014, the "New National Ten Policies" present institutional requirements and guidance for the high-quality development of the insurance industry in this new stage. The "New National Ten Policies" guide the industry to achieve high-quality development while preventing and resolving risks. The "New National Ten Policies" set clear industry development goals. By 2029, a framework for the high-quality development of the insurance industry will be initially formed, covering a steadily expanding population with comprehensive protection, continuously improving services, a balanced and robust asset allocation, sufficient solvency, and sound and effective governance and internal controls. The insurance regulatory system will be further enhanced, and regulatory capabilities and effectiveness will be significantly increased. By 2035, a new structure of the insurance industry with a complete market system, abundant and diverse products and services, scientific and effective regulation, and strong international competitiveness will be basically established. Specific measures require achieving high-quality development while preventing and resolving risks. In terms of risk prevention, the "New National Ten Policies" emphasize strict approval of insurance institutions and propose the prudent and orderly promotion of downsizing and quality improvement for the first time. They also implement a differentiated classification and hierarchical management mechanism for high-risk/high-intensity supervision and low-risk/low-intensity supervision. Prudent progress will be made in risk disposal, with financial licenses being confiscated and bankruptcy liquidation procedures being initiated for insurance institutions with high risks and no continuing operational capabilities. In terms of high-quality development, the liabilities end proposes enriching forms of catastrophe insurance protection, actively developing the third pillar pension insurance, enhancing the service protection level of health insurance, and improving the inclusive insurance system in four major aspects, combining the development of the insurance industry with people's livelihood security. On the assets end, the emphasis is on providing patient capital services to the real economy, focusing on national major strategies and key areas, serving technological innovation and the construction of modern industrial systems, and leveraging the advantages of long-term investment of insurance funds. It is expected that the industry will go back to the basics and differentiated regulation will help leading insurance companies accelerate their high-quality development. The "New National Ten Policies" propose strengthening the application of rating results, promoting the classification and management of insurance sales personnel, and strengthening the supervision of product fee differentials, among others. It is expected that leading companies that are the first to carry out channel and product reforms are more likely to meet the criteria for low-risk supervision, which will help accelerate their high-quality development process. In terms of development direction, the "New National Ten Policies" emphasize the deep integration of products and services. Leading companies are taking the lead in laying out a product + service system, such as property insurance risk reduction management, the integration of pension insurance and pension services, and the integration of health insurance and health services, which are advantageous in seizing opportunities and gaining a competitive edge.