Since January 1 this year, listed insurance companies have implemented two new standards, "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments" in March 2017 and "Accounting Standards for Business Enterprises No. 25 - Insurance Contracts" in December 2020.

The CBRC said that after careful preparation, listed insurance companies have the conditions to implement the two new standards, which will be conducive to the stable operation of the insurance industry, return to the source of insurance protection, and achieve high-quality development.

It is reported that the new accounting standards for financial instruments compared with the original standards, the main changes include two aspects: first, the classification of financial assets from "four classifications" to "three classifications", respectively, financial assets measured at amortized cost, financial assets measured at fair value and their changes are included in other comprehensive income, and financial assets measured at fair value and their changes are included in current profit and loss. Second, the provision for impairment of financial assets is changed from the "incurred loss method" to the "expected credit loss method", which requires the estimation of expected credit risk losses based on historical loss information, current information and future forecast information, and the provision for impairment.

Compared with the original insurance contract standard, the new insurance contract standard has three major changes: First, under the original standard, the premium collection is recognized as income in one lump sum, while under the new standard, the premium collection is recognized as income period by period throughout the insurance period, and the cash value component is excluded. Second, the discount rate of liability evaluation under the original criterion uses the 750-day moving average Treasury bond yield curve, and the impact of the yield curve changes is included in the current profit and loss. The new standard uses the yield curve of the current Treasury bonds as the discount rate, and the impact of the yield curve changes is included in the owner's equity. Third, according to the source of profit, the new standard distinguishes underwriting performance and investment return performance respectively. The two new standards put forward new requirements for internal management, financial accounting and performance assessment of insurance companies, which is conducive to more stable operation and high-quality development of insurance companies.

 First, insurance companies continue to return to their main business. The proportion of premium income of general life insurance, health insurance and accident insurance with strong protection attributes has increased year by year, from 54.5% in 2018 to 72.9% in 2022. Second, the people's sense of gain has significantly increased. The amount of protection for every $1 premium in 2022 is $2,924, an increase of 54% from 2018. Third, we will vigorously support the development of the real economy. By the end of 2022, insurance funds had financed more than 21 trillion yuan for the real economy, invested more than 1 trillion yuan in green industries such as carbon neutrality and carbon peaking, and invested more than 4 trillion yuan in manufacturing and strategic emerging industries. Fourth, operational efficiency has been continuously improved. Business and management fees and commissions accounted for 17.2% of operating revenue in 2022, down 6.2 percentage points from 2018. Fifth, underwriting profitability has steadily increased. The underwriting profit of the insurance industry in 2022 was 41 billion yuan, 2.71 times that of 2018 and the highest value in the past five years. Sixth, maintain sufficient operating cash flow. The net cash flow from operating activities in 2022 was 1.79 trillion yuan, four times that of 2018.

Responsible Editor: Yuan Jiansong