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	REGULATORY INDICATORS FOR THE BRANCHES OF PROPERTY INSURANCE COMPANIES (TRIAL)

	(Circular of China Insurance Regulatory Commission on Distributing the Regulatory Indicators for the Branches of Property Insurance Companies (Trial) (No.20 [2003] of China Insurance Regulatory Commission), February 20, 2003: In order to strengthen the regulation of the branches of property insurance companies, and to promote the healthy development of property insurance companies, this Commission has formulated the Regulatory Indicators for the Branches of Property Insurance Companies (For Trial Implementation). The relevant issues are notified as follows: 1. Except when there are special indications, the regulatory indicators shall be surveyed every quarter, and the data used shall be obtained from the Regulatory Statements of Different Insurance Types of Property Insurance Companies (For Trial Implementation) (in which the data listed are all accumulative), and from other quarterly statistics statements promulgated by this Commission. The insurance offices shall, within 15 days after the end of each quarter, submit the Survey Form of Regulatory Indicators for the Branches of Property Insurance Companies and the analysis reports, and the analysis shall include the survey of the regulatory indicators for insurance companies and the reasons for abnormal changes of the regulatory indicators etc. 2. The insurance offices may set forth the normal values of the indicators according to the actualities of their respective jurisdictions, or may use the average values of the indicators of the companies within their respective jurisdictions of the current period as the reference values to evaluate the survey results of the branches of property insurance companies. The insurance offices may determine the key regulatory objects and contents according to the survey results. 3. The regulatory indicators of the branches of property insurance companies shall be implemented as of April 1, 2003. If any problem is found out during the use thereof, please report to China Insurance Regulatory Commission (CIRC) in time)


SUBJECT : PROPERTY INSURANCE; INDICATORS
ISSUING DEPARTMENT : CHINA INSURANCE REGULATORY COMMISSION
ISSUE DATE : 02/20/2003
IMPLEMENT DATE : 04/01/2003
LENGTH : 2,103 words
TEXT :

TABLE OF CONTENTS

CHAPTER I CLASSIFICATIONS OF REGULATORY INDICATORS
CHAPTER II INDICATORS FOR PREMIUM INCOMES
CHAPTER III INDICATORS FOR RECEIVABLE PREMIUMS AND PER-VEHICLE PREMIUMS
CHAPTER IV INDICATORS FOR COMPENSATIONS
CHAPTER V INDICATORS FOR EXPENSES
CHAPTER VI INDICATORS FOR INSURANCE PROFITS
CHAPTER VII INDICATORS FOR RESERVES (ANNUAL INDICTORS)
CHAPTER VIII INDICATORS FOR ASSETS
CHAPTER IX OTHER KINDS

CHAPTER I CLASSIFICATIONS OF REGULATORY INDICATORS

(1) Regulatory indicators can be classified as monitoring indicators, attention indicators and understanding indicators on the basis of the degree of attention.

Monitoring indicators refer to the indicators that shall be surveyed and analyzed in the statements of each quarter. Attention indicators refer to the indicators that shall be surveyed in the statements of each quarter (or year), but not necessarily analyzed. Understanding indicators refer to the indicators that only are surveyed and analyzed when necessary.

The method of monitoring (paying attention, understanding) refers to the method to analyze the indicators, when any abnormal change occurs to a monitoring (attention, understanding) indicator, or when it is needed to make analysis, the method of monitoring (paying attention, understanding) may be applied to make further analysis and to find out the reason for the fluctuation, and the analysis results shall be verified through the method of enquiry or inspection etc.

The aforesaid indicator classifications, except that of monitoring indicators, are all instructional classifications, and the insurance offices may adjust the indicator classifications according to the actualities of the localities.

(2) Indicators can be divided into quarterly indicators, half-year indicators, and annual indicators on the basis of the period for survey.

Quarterly indicators refer to the indicators surveyed on the basis of the amount obtained at the end of each quarter, or the accumulative amount of a year obtained at that time.

Half-year indicators refer to the indicators surveyed on the basis of the amount obtained at the end of each half a year, or the accumulative amount of a year obtained at that time.

Annual indicators refer to the indicators surveyed on the basis of the amount obtained at the end of each year, or the accumulative amount of a year obtained at that time. Except when there are special indications, the indicators distributed this time are all quarterly indicators.

(3) Regulatory indicators can, on the basis of regulatory objects, be divided into indicators for premium incomes, indicators for receivable premiums and per-vehicle premiums, indicators for compensations, indicators for expenses, indicators for insurance profits, indicators for reserves, indicators for assets, and other indicators.

CHAPTER II INDICATORS FOR PREMIUM INCOMES

(1) Monitoring indicators: increase rate of premium income, increase rate of premium income of different insurance types (hereinafter referred to as types), and contribution rate of premium income of different insurance types.

(2) Attention indicators: increase rate of premium income of direct business, and increase rate of premium income of indirect business, contribution rate of premium income of newly established agencies, and contribution rate of premium income of new products.

(3) Understanding indicators: contribution rate of premium income under major regulatory policies, and contribution rate of premium income under the impacts of other businesses.

(4) Formulae:

1.
Increase rate of premium income of ** insurance (kind) = 100% x [premium income of the current period of ** insurance (kind) - premium income of ** insurance (kind) of the same period of last year] / premium income of ** insurance (kind) of the same period of last year

2.
Contribution rate of premium income of ** insurance (kind) =100% x [premium income of the current period of ** insurance (kind) - premium income of ** insurance (kind) of the same period of last year] / (total premium income of the current period - total premium income of the same period of last year)

(5) Explanations:

1. Premium income refers to the premium income shown on the quarterly statements taken as the basis (excluding the reinsurance premium and other incomes);
2. Important regulatory policies refer to the regulatory policies that are formulated by CIRC or the relevant departments of the state and that have important impacts on the insurance business, such as the provisions on joint insurance, and general insurance policy etc.;
3. Impacts of other business include the impacts of the new operation methods, such as electronic commerce etc., on the insurance business.

CHAPTER III INDICATORS FOR RECEIVABLE PREMIUMS AND PER-VEHICLE PREMIUMS

(1) Monitoring indicators: rate of receivable premium, and rate of receivable premium of different types.

(2) Attention indicators: per-vehicle premium.

(3) Formulae:

1.
Rate of receivable premium of ** insurance = 100% x receivable premium of ** insurance of the current period / premium income of ** insurance of the current period

2.
Per-vehicle premium = 100% x premium income of motor vehicles of the current period / number of vehicles insured of the current period

(4) Explanations:

1. The receivable premium of the current period refers to the amount of receivable premium shown on the balance sheet;
2. The survey of per vehicle premium shall be limited to vehicle insurances;
3. The motor vehicles mentioned in per-vehicle premium shall exclude tractors and motorcycles;
4. Premium income refers to the premium income shown on the quarterly statements taken as the basis (excluding the reinsurance premium and other incomes).

CHAPTER IV INDICATORS FOR COMPENSATIONS

(1) Monitoring indicators: comprehensive compensation rate, comprehensive compensation rate of different types.

(2) Formula:
1.
Comprehensive compensation rate of ** insurance = 100% x comprehensive compensation expense of ** insurance of the current period / (retained reinsurance premiums of ** insurance of the current period - balance of the unearned premium reserve of ** insurance of the current period - balance of the long-term premium reserve)

(3) Explanations:

1. Comprehensive compensation expenditure of ** insurance = compensation expense of ** insurance of the current year + balance of the outstanding loss reserve of ** insurance + compensation expense of reinsurance of ** insurance - received reinsurance compensation of ** insurance - recourse income of ** insurance;
2. Retained reinsurance premium refers to the net amount after deduction of the reinsurance expense from the sum of premium income plus reinsurance premium income.

CHAPTER V INDICATORS FOR EXPENSES

(1) Monitoring indicators: comprehensive expense rate, working expense rate, and handling charge rate.

(2) Attention indicators: comprehensive expense rates of different types, working expense rates of different types, handling charge rates of different types, increase rates of comprehensive expense of different types, increase rates of working expense of different types, increase rates of handling charge of different types.

(3) Understanding indicators: increase rates of various detailed working expenses, and the proportion of each detailing working expense accounts for in the total working expense.

(4) Formulae:

1.
Comprehensive (working, handling) expense rate of ** insurance = 100% x comprehensive (working, handling) expense of ** insurance of the current period / premium income of ** insurance of the current period

2.
Increase rate of comprehensive (working, handling) expense of ** insurance = 100% x [comprehensive (working, handling) expense of ** insurance of the current period - comprehensive (working, handling) expense of ** type of the same period of last year] / comprehensive (working, handling) expense of ** insurance of the same period of last year

3.
Proportion of ** working expense accounting for in the total working expense = 100% x ** working expense of the current period / total working expense of the current period

(5) Explanations

1. Comprehensive expense = working expense + handling charge expense + reinsurance expense + business tax and annex + insurance security fund + commission expense + received reinsurance expense;
2. Detailed expenses refer to the expenses listed in the detailed statements of working expenses of the property insurance company, and the proportion refers to the proportion of each detailed expense accounts for in the total working expense.

CHAPTER VI INDICATORS FOR INSURANCE PROFITS

(1) Monitoring indicators: insurance profit rate, increase rate of insurance profit.

(2) Attention indicators: profit rates of different insurance type, profit increase rates of different type, profit contribution rates of different types.

(3) Formulae:

1.
Profit rate of ** insurance = 100% x profit of ** insurance of the current period / premium income of ** insurance of the current period

2.
Profit increase rate of ** insurance = 100% x (profit of ** insurance of the current period - profit of ** insurance of the same period of last year) / profit of ** insurance of the same period of last year

3.
Profit contribution rate of ** insurance (kind) = 100% x [profit of ** insurance (kind) of the current period - profit of ** insurance (kind) of the same period of last year] / (total amount of insurance profit of the current period - total amount of insurance profit of the same period of last year)

(4) Explanations:

1. Where one or two indicators of all the types or of a certain type of the current period or the last period is negative, the increase rate of insurance profit will have no meaning;
2. Premium income refers to the premium income shown on the quarterly statements taken as the basis (excluding reinsurance premium and other incomes).

CHAPTER VII INDICATORS FOR RESERVES (ANNUAL INDICTORS)

(1) Monitoring indicators: change rate of outstanding loss reserve, rate of outstanding loss reserve, ratio of IBNR to outstanding loss reserve, change rates of outstanding loss reserve of different types, rates of outstanding loss reserve of different types, ratios of IBNR to outstanding loss reserve of different types.

(2) Attention indicators: adequacy rate of outstanding loss reserve, adequacy rates of outstanding loss reserve of different types.

(3) Formulae:

1.
Change rate of outstanding loss reserve of ** insurance = 100% x balance of outstanding loss reserve of ** insurance of the current period / balance of outstanding loss reserve of ** insurance at the end of last period

2.
Rate of outstanding loss reserve of ** insurance = 100% x outstanding loss reserve of ** insurance drawn in the current period / premium income of ** insurance of the current period

3.
Ratio of IBNR to outstanding loss reserve of ** insurance = 100% x IBNR of ** insurance drawn in the current period / outstanding loss reserve of ** insurance drawn in the current period

4.
Adequacy rate of outstanding loss reserve of ** insurance = 100% x compensation expense of ** insurance occurring prior to the current fiscal year / outstanding loss reserve of ** insurance transferred back in the current period

(4) Explanations:

1. Premium income refers to the premium income shown on the quarterly statements taken as the basis (excluding reinsurance premium and other incomes);
2. IBNR refers to the loss reserve that has occurred but not reported;
3. Compensation expense of ** insurance occurring prior to the current fiscal year may be calculated on the basis of the Compensation Actually Paid out in the Current Year for the Insurance Accidents Occurring in the Previous Years (Appendix form 1 of S2-02 of CIRC).

CHAPTER VIII INDICATORS FOR ASSETS

(1) Attention indicators: fixed asset rate, non-performing asset rate (half-year indicator).

(2) Formulae:

1.
Fixed asset rate = 100% x average fixed assets of the current period / average total assets of the current period

2.
Non-performing asset rate = 100% x end non-performing assets / end total assets

(3) Explanations:

1. Average fixed assets of the current period = (end fixed assets + beginning fixed assets) / 2, fixed assets include net fixed assets, projects under construction, and sorted out fixed assets;
2. Average total assets of the current period = (beginning total assets + end total assets) /2;
3. Non-performing assets refer to the non-performing assets mentioned in the Form of Non-Performing Asset Status of Insurance Companies (form H1-01 of CIRC) issued by CIRC.

CHAPTER IX OTHER KINDS

(1) Attention indicator: 100-Yuan business cash flow of premium income (annual indicator).

(2) Understanding indicator: capital concentration degree (annual indicator).

(3) Formulae:

1.
100-Yuan business cash flow of premium income = 100% x net amount of cash flow generated in the business activities in the current period / premium income of the current period

2.
Capital concentration degree = 100% x net amount submitted by the branches in the current period / (net amount submitted by the branches in the current period + net increased amount of cash and equivalent of cash in the current period)

(4) Explanations:

1. Please refer to the cash flow statements for the net amount of cash flow, and the net increased amount of cash and equivalent of cash generated in business activities;
2. Net amount submitted by the branches amounts to the margin between the capital submitted by the branches to the head office through the bank and the capital allocated by the head office through the bank, and excludes the allocation of materials;
3. The net increased amount of cash and equivalent of cash of the branches shall include the change of cash and equivalent of cash resulted from the capital transfer with the head company.