State Administration of Financial Regulation: The main goal of promoting the high-quality development of green insurance

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China Research Network

Recently, the "Guiding Opinions on Promoting the High-quality Development of Green Insurance" issued by the State Administration of Financial Supervision clearly put forward the main objectives of two stages, aiming to thoroughly implement the decision-making and deployment of the CPC Central Committee and the State Council on green development, and give full play to the key role of insurance in promoting the comprehensive green transformation of economic and social development.

The first phase of the target is set at 2027, emphasizing that the green insurance policy support system should reach a relatively complete state, and the service system should be initially established. During this period, the risk reduction service and management mechanism need to be optimized, and the product and service innovation ability should also be significantly improved. In order to achieve this goal, a number of typical green insurance service models should be formed to ensure that the growth rate of risk protection of green insurance and the growth rate of green investment of insurance funds are higher than the overall growth rate of the industry. In this way, the role of green insurance in promoting the green transformation of the economy and society will be substantially enhanced.

By 2030, the second phase is even more ambitious. At this stage, the development of green insurance should make important progress, and the service system should be basically sound, so as to make it an important financial means to help the comprehensive green transformation of the economy and society. At that time, the risk protection level of green insurance and the scale of green investment in insurance funds should be significantly improved, which is not only reflected in the figures, but also in the satisfaction and recognition of green insurance from all walks of life. This will significantly enhance the market influence of green insurance and contribute more to the green development of the mainland.

To achieve these goals, we need not only the policy support and guidance of the government and regulatory authorities, but also the active participation and innovation of the insurance industry. At the same time, it is also crucial to strengthen the publicity and promotion of green insurance and improve the awareness and acceptance of green insurance by all sectors of society. Through these efforts, it is believed that the mainland's green insurance industry will usher in broader development prospects and provide strong financial support for the comprehensive green transformation of the economy and society.

The first is to improve the green investment management system. Establish and improve the investment management system, improve the investment management system and process, and incorporate environmental, social and governance factors into the corporate governance, investment decision-making and risk control processes.

The second is to strengthen the support for the green development of insurance funds. Give full play to the advantages of long-term investment of insurance funds, increase the allocation of green bonds under the premise of controllable risks and sustainable business, and increase investment in green industries.

The third is to strengthen the management of the green investment process. Enhance the ability to analyze the environmental, social and governance risks of the invested assets, strengthen due diligence, compliance review, investment approval and post-investment management, urge financiers to strengthen environmental, social and governance risk management by improving contract terms and strengthening social supervision, and encourage the measurement of carbon emissions of investment portfolios.

The "Guiding Opinions" also pointed out that all insurance companies should implement the main responsibility for the development of green insurance. On the one hand, establish a leadership and coordination promotion mechanism for green insurance organizations, designate specialized agencies or senior managers to be responsible for green insurance work, study and set up relevant performance appraisal indicators, clarify the development strategy of green insurance, determine key support directions and areas, and promote the development of green insurance as a whole. On the other hand, we will establish a working mechanism conducive to green insurance innovation, improve the internal control system and assessment and evaluation system of green insurance, and continue to promote the innovation of green insurance products and services. In addition, the "Guiding Opinions" proposes that all insurance companies should formulate green insurance work plans and give differentiated support policies in terms of business strategy and business management. For example, strengthen green insurance training and enrich the pool of professional talents; Explore the establishment of specialized institutions such as green insurance professional departments, characteristic branches, and innovation laboratories, and actively apply new technologies and technologies to improve the digital level of carbon management.

According to the display released by the China Research Institute of Puhua Industry Research Institute:

Green insurance plays a vital role in promoting the comprehensive green transformation of economic and social development. Specifically, its role is mainly reflected in the following aspects:

First of all, green insurance provides economic protection for environmental resource protection, social governance, green industry operation and green life consumption by providing risk protection and financial support. This will help promote the active participation of all sectors of society in the green transition, reduce the risk of green projects, and improve the feasibility of projects, thereby accelerating the development of the green economy.

Second, green insurance has played an active role in guiding businesses and individuals to take environmental protection measures. By providing targeted insurance products, green insurance encourages businesses and individuals to reduce environmental pollution, reduce energy consumption, and achieve sustainable development. This incentive mechanism helps to form a good atmosphere for the whole society to participate in environmental protection, and promotes the development of the economy and society in a green, low-carbon and circular direction.

In addition, green insurance can also help optimize resource allocation and improve the investment efficiency of green projects. Through the risk assessment and capital allocation functions of green insurance, capital can be guided to green, environmentally friendly and efficient industries and projects, and the optimization and upgrading of the economic structure can be promoted.

Finally, the development of green insurance will also help enhance the innovation capacity and competitiveness of the insurance industry. With the continuous expansion and deepening of the green insurance market, insurance companies need to continuously launch innovative green insurance products that meet market demand, which will promote the innovation and development of the entire insurance industry.

In summary, green insurance has played an important role in promoting the comprehensive green transformation of economic and social development. In the future, with the strengthening of policy support and the continuous growth of market demand, the development prospects of green insurance will be broader.

As an important institutional investor in the capital market, insurance funds have played an important role in supporting the steady operation of the capital market, increasing market transparency and standardization, and optimizing the investor structure.

On the one hand, insurance funds have the characteristics of long-term and stability, with stable investment strategies and sources of funds, which can generate sustained and stable investment demand for the market, help balance the relationship between market supply and demand, reduce market volatility and improve market stability; On the other hand, the investment decisions of insurance institutions usually need to go through strict risk management and prudent investment procedures, which helps to improve the transparency and standardization of the market and provide investors with more reliable reference and protection.

In the first half of 2023, the original insurance premium income of insurance companies was 3.2 trillion yuan, a year-on-year increase of 12.5%. Among them, the growth rate of original insurance premium income of the life insurance industry reached 13.38% year-on-year, significantly reversing the three-year growth decline; The property insurance industry grew by 9.75% year-on-year, continuing the high growth trend since 2022.

According to public data, as of the end of the first half of the year, the total assets of insurance companies were 29.2 trillion yuan, a year-on-year increase of 9.6%; The balance of insurance funds was 26.8 trillion yuan, a year-on-year increase of 9.7%.

Listed insurers also announced their premium data for the first half of the year. In the first six months of this year, the premium income of PICC Life Insurance and Taiping Life Insurance both increased by 9.4% year-on-year; Ping An Life increased by 8.7% year-on-year; Chinese life increased by 6.9% year-on-year, and the scale is still the largest; New China Insurance and CPIC Life Insurance increased by 5.1% and 4.0% year-on-year, respectively.

Specifically, in June this year, the monthly premiums of China Life, Ping An, CPIC, Xinhua and PICC all increased significantly year-on-year, with the highest monthly growth rate of PICC Life Insurance exceeding 80%; China Life, which has the lowest growth rate, also saw an 18% increase in monthly premiums. Despite the timing of the quarter-end and half-year ends, the growth rate is still significantly higher than the same period in previous years.

From the perspective of investment, as of the end of June this year, the balance of insurance funds reached 26.82 trillion yuan, of which 11.46 trillion yuan was invested in bonds, accounting for 42.73%; bank deposits were 2.9 trillion yuan, accounting for 10.8%; stocks and securities investment funds were 3.46 trillion yuan, accounting for 12.91%.

From the perspective of asset allocation structure, the overall asset allocation of the industry is dominated by bonds, financial products (including insurance asset management products), and bank deposits, accounting for more than 70% of the total.

The mainland economy is in a critical period of achieving high-quality development, and the demand for residents' wealth management, asset allocation and pension investment is increasing, and there are rare opportunities for medium and long-term funds to participate in the reform and development of the capital market. With the continuous improvement of relevant regulatory policies, the investment channels and investment fields of insurance funds have gradually expanded.

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