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Life Insurer Improves Capital Management System
The China Life Insurance Co. Ltd, China's biggest life insurer, is exploring an effective capital management system in line with international standards to enhance the competitiveness of its products.
A spokesman with the company contributed the current high price of insurance products to the inadequate fund management mechanism.
"With China's impending entry into the World Trade Organization (WTO), the industry is faced with dire challenges," he said, adding that the establishment of a capital management system is crucial to the healthy development of the industry.
The development strategy of insurers is now shifting from the traditional type of saving insurance to investment-based ones. The demarcation line between insurance and securities has becoming less clear than before, he said.
The framework Life Insurer plans to formulate and include three aspects: the establishment of a policy-making panel with three separate arms of fund utilization, management and risk control; the establishment of a investment decision mechanism and the separating operation of business management and supervision.
The investment portfolio will also be reshuffled under the system, which is aimed to increase the company's returns to the maximum level, he added.
In 2000, the life insurer's total capital increased to 160 billion yuan, 100 billion yuan of which is usable, according to the spokesman.
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