Even a "small" insurance company has a low probability of bankruptcy. Friends who want to know can read this article: Which insurance company has the best reputation? Will small insurance companies go bankrupt?
So, why is the possibility of bankruptcy of insurance companies so low? There are two main reasons:
1, the entry threshold for insurance companies is high.
Article 68 of the Insurance Law stipulates that the establishment of an insurance company must meet the following conditions: the major shareholders have sustained profits, good reputation, no record of major violations of laws and regulations in the last three years, and their net assets are not less than RMB 200 million.
This means that if you want to set up an insurance company, you must be rich, decent and know how to operate.
Of course, the registered capital and strength are just stepping stones. Whether the insurance license can be obtained smoothly in the end depends on the decision of the CBRC.
2. The state's supervision of insurance companies is very strict and strong.
The state's means of supervision over insurance companies are as follows:
(1) fund supervision
The CIRC has made strict regulations on the use of funds by insurance companies: they can't be deposited in non-bank financial institutions, can't directly engage in real estate development and construction, can't engage in venture capital, and can't buy st shares.
(B) solvency supervision
The requirements of CBRC are: comprehensive solvency adequacy ratio ≥ 100%, core solvency adequacy ratio ≥50%, and risk rating above Grade B (inclusive).
As long as one of these three indicators is not up to standard, companies whose solvency is not up to standard will face strict rectification measures.
(3) Reinsurance mechanism
Reinsurance mechanism is actually the insurance behind insurance companies, and insurance companies need to buy insurance from reinsurance companies to share risks.
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