CIRC ANNOUNCES RISK CLASSIFICATION IN NON-LIFE SECTOR

The China Insurance Regulatory Commission (CIRC) has announced a Guide to Methods for Classification of Risk Units in Property Insurance, in what it described as an attempt to standardise order in the domestic property insurance sector and to guide insurers towards improving their risk management level. The document classifies the risk units of four categories of insurance objects: hydropower generating enterprises, wind power generating units, aerospace risks and roads and bridges. A “Risk Unit” is the maximum scope of loss that could be caused by an insurance accident. Under Chinese Insurance Law the liability taken on by an insurer for an individual risk cannot exceed 10% of the company’s paid-up capital plus capital reserve. The CIRC said that it would be issuing more such guide documents for the classification of risk units in other commercial sectors. The Commission began a study of risk unit classification methods last October.