The first reaction of insurance regulators to problematic insurance companies is usually informal. Regulators can work with company management to find and deal with the causes of problems. In most countries, goodwill merger or acquisition is a common practice. The success of these actions depends on the willingness of insurance companies to cooperate, the financial situation of insurance companies, the goodwill of other companies and the prestige and coercive power of regulatory agencies.
Two, take formal corrective or punitive measures
Although the specific ways and degrees of formal measures vary from country to country, they generally include the following clear written instructions: companies are required to obtain the permission of regulatory agencies before engaging in certain transactions; Restrict or stop underwriting new business; Increase capital; Stop engaging in certain businesses. If the insurance company fails to correct the problems it has found, it will lead to more severe measures.
In some countries, if the insurer fails to act according to the requirements of the regulatory authorities, the regulatory authorities usually disclose their suggestions or instructions to the insurer in the public or official media, thus reminding the public of the insurer's problems and defects. In other countries, the regulatory authorities have the right to replace the company's managers and auditors in serious cases. More severe measures include suspending or canceling the qualification of insurance companies to underwrite certain types of insurance, or even revoking their licenses. Such measures are usually submitted to the court or other institutions for review and decision.
Third, rectify the company.
In order to realize the reorganization of the problem company, the regulator can obtain the control right of the company. The so-called rectification means taking measures to restore the insurer's function in the market. In some countries, the adoption of rectification measures may require a court ruling, while in other countries, it is not necessary to obtain a court ruling in advance. Rectification is mostly a compromise measure before liquidation, aiming at minimizing market volatility and preventing systemic risks.
Fourth, liquidation according to law.
The last measure taken by insurance regulators to deal with insurance companies in financial difficulties in China is to liquidate and terminate all businesses of the company. Liquidators are generally appointed by insurance regulatory agencies and courts. The liquidator is responsible for counting the assets of the insurance company and preparing to distribute them to policy holders, creditors and shareholders (if possible). In the liquidation procedure, the insured usually enjoys priority. Some types of insurance policyholders can enjoy higher rights than others.
In the highly competitive insurance market, it is inevitable that insurance companies will lose their solvency. Therefore, regulators must face the problem of how to protect the interests of relevant insurers. Most countries have established a guarantee mechanism for insurance payment or compensation, and some countries have also established bankruptcy guarantee organizations or guarantee funds. In China, the Insurance Law of People's Republic of China (PRC), Regulations on the Administration of Foreign-funded Insurance Companies in People's Republic of China (PRC), Provisions on the Allocation of Internal Organizations and Main Responsibilities of China Insurance Regulatory Commission, Regulations on the Administration of Insurance Companies, Rules for On-site Inspection, Manual for On-site Inspection and Procedures for Administrative Punishment all have clear and specific provisions on the correction and punishment of problematic institutions.
If you have any other insurance questions, please come: protect more fish and say insurance! ,