China Insurance Regulatory Commission

October 11, 2006

I. About the 13th IAIS Annual Conference

1. The 13th IAIS Annual Conference

The 13th Annual Conference of the International Association of Insurance Supervisors (referred to as IAIS hereinafter) will be hosted by China Insurance Regulatory Commission (referred to as CIRC hereinafter) in Beijing on October 16-21, 2006. Including the IAIS Triannual Meetings that will be held back-to-back with the Annual Conference, the whole event will last 6 days: the IAIS Triannual Meetings are to be held on October 16-18 and the Annual Conference is to be held on October 19-21. The official opening ceremony of the Annual Conference will be held in Beijing Hotel at 9 AM, October 19. The theme for the Conference is "Fostering Development and Managing Risks: Challenges for Insurance Supervision". Taking China's economic and social needs into consideration and after active consultation with IAIS, CIRC, the host of this event, has determined twelve conference topics with an aim to demonstrate insurance's function of serving for the drive of building a harmonious socialist society. These topics include pension, agricultural insurance and catastrophic insurance, etc. During this conference, insurance supervisors from all over the world, leaders of international organizations and CEOs of international insurance groups as well as important figures of domestic insurance industry, representatives from relevant ministries and commissions of the State Council, and financial experts totaling 600 will gather in Beijing. The Beijing Annual Conference is expected to be the biggest summit conference of international insurance industry with the largest number and highest rank of attendees.

2. Multi- and Bilateral Activities during the Annual Conference

During the Annual Conference, various activities of multi- and bilateral supervision cooperation will be held to promote cooperation between Chinese insurance regulatory authority and the international insurance supervisory community. After initiating cooperation of insurance supervision among countries in Asia and issuing Beijing Declaration in 2005, the first Asian Forum of Insurance Regulators, in which insurance supervisors from Asian countries will gather together to reach consensus on issues such as enhancing cooperation in supervising integrated financial operation will be held during the conference. Besides, initiating documents for Sino-US Insurance Working Group will be signed to strengthen Sino-US insurance cooperation. The first Sino-European Dialogue on Insurance Supervision will be held to establish a dialogue mechanism on insurance supervision with the EU.

II. About IAIS and China's Wining Hosting Right of 2006 Annual Conference

1. About IAIS

IAIS is a global organization for insurance supervision. Established in 1994, Switzerland, IAIS aims to establish principles, guidelines and standards for insurance supervision, so as to enhance supervision in member countries. IAIS consists of insurance supervisory authorities from 129 countries and regions. Besides, 98 companies and organizations are observers of IAIS. IAIS represents the will of insurance supervisory authorities in different countries and regions and exerts remarkable influence on the development direction of international insurance industry. Being an IAIS member and thus having the right to vote indicates that the insurance supervision authority of a country is a part of the international insurance community and has influence on international insurance affairs.

More specifically, IAIS plays three important roles:

(1) Establishing international guidelines for insurance supervision. IAIS normally passes guidelines and standards for insurance supervision by means of voting by members. As model documents for international insurance supervision, these guidelines enjoy high authority and have influence on the development direction of international insurance industry.

(2) Issuing information on the latest development of international insurance industry. Since insurance industry information from all over the world converges at IAIS, it gets hold of the situation of insurance supervision in various countries, which enables IAIS to issue information on the newest development of international insurance industry and to predict the trend for further development. Information collected by various Technical Committees of IAIS serves as guidebooks to the newest trends in various special fields of international insurance industry.

(3) Providing a communication platform for international insurance community. Every year IAIS organizes about 60 meetings of various kinds around the world, which provide a communication platform for members. Insurance supervisory authorities and representatives of international insurance industry express opinions, tighten connections and promote understanding via this platform.

2. About CIRC Winning Hosting Right of the Annual Conference

During the 7th Annual Conference held in South Africa on October 9-12 2000, China became an IAIS member with the voting right for crucial issues and joined 6 Sub-Committees of IAIS. In the 10th Annual Conference held in 2003, Singapore, the CIRC obtained the hosting right of 2006 Annual Conference. It was determined that the 13th Annual Conference of IAIS would be held in Beijing.

As a summit conference in international insurance community, IAIS Annual Conference exerts important influence on international guidelines for insurance supervision and the development strategy of international insurance industry. Obtaining the hosting right of IAIS Annual Conference indicates that China's insurance regulatory authority has become a main force of international insurance supervision and China will play an important role in international cooperation of insurance supervision. It also indicates that, developing countries represented by China start to have their own voice in international financial rules-making process, which has been dominated by the developed countries for so many years. The CIRC's increasing expansion of international influence and gradual promotion of its international status testifies to the rapid growth of insurance industry in China over the two decades. Giving the hosting right to China shows that IAIS highly commends the achievements of the Chinese government in stabilizing financial market, promoting the development of insurance industry and safeguarding interest of the insurance policy holders.

III. Significance of Holding the 13th IAIS Annual Conference in China

In June 2006, Several Opinions of the State Council of on the Reform and Development of Insurance Industry was issued. The Opinions set a higher standard for insurance industry in fully exerting its functions of economic compensation, financing and social management as well as fully serving the harmonious socialist society. Hosting IAIS Annual Conference under this background indicates that the government recognizes insurance's economic and social importance. Insurance is used as an effective supplementation of governmental macroeconomic regulation in market economy. There is no precedent of IAIS Annual Conference being hosted by countries undergoing economical transformation, and hosting this Conference is an important indication of China walking towards a market economy. Through this Conference, the government will restate to the world its idea of running the state and its firm faith in adhering to market economy, improving governmental macroeconomic regulation and advancing harmonious socialist society.

1. Significance of Holding Annual Conference for the Status of Chinese Insurance Industry in International Financial Community

The 13th IAIS Annual Conference is a milestone for the cooperation between CIRC and IAIS. It is a grand event for CIRC, for Chinese insurance industry and more for the international insurance community. The important status of IAIS in international insurance community will make this Conference an important symbol of Chinese insurance regulatory authority coming into the core circle of international financial supervision community. From now on, China will become a main force in international insurance supervision. China will make a more active gesture in the cooperation of international insurance supervision and make its due contribution to the internationalization of Chinese insurance supervision and the coordinated development of international insurance industry.

More specifically, the significance for China to host the IAIS Annual Conference and to actively participate in international cooperation of insurance supervision lies in the following three aspects:

Firstly, it will expand the international influence of Chinese insurance industry. Hosting the IAIS Annual Conference successfully will expand China's international influence and help China to express its own opinions so as to establish an international status matching the insurance strengthen of China. It will also facilitate China's participation in the establishment of international standards and help China to exert its influence on the international rules-making process so as to reasonably safeguard the interests of Chinese insurance industry and to create a sound international environment for the development of Chinese insurance industry;

Secondly, it will promote the fast and sound development of Chinese insurance industry. To grow bigger and stronger as well as realize healthy and rapid development, we must handle the relationship between growth and risk appropriately. Hosting this grand event and participating in international insurance cooperation will help China to draw upon international supervision experiences as well as learning the mature practices of international insurance industry, keeping abreast of the current trends in international insurance industry and improving risk management of Chinese insurance industry so as to promote the development of Chinese insurance market.

Thirdly, it will help Chinese insurance industry to play a bigger role in the international market. With continuous integration of the world economy and liberalization of international trade, insurers of various countries are confronted with a situation of competition with each other on the same platform and try to achieve growth together. Under this situation, the Chinese insurance regulatory authority should strengthen international communication and expand its international influence. This will improve the transparency of Chinese insurance market, gain the understanding of different countries, help China to make more initiatives in international insurance services and create international environment in favor of the development of Chinese insurance industry. It will also serve as an opportunity for domestic insurers to get familiar with international insurance market, so as to facilitate their entry into the international insurance market.

2. Significance of the Annual Conference to Insurance Industry's Role in the Drive to Build for a Harmonious Socialist Society

The Annual Conference to be held in China in a new era of economic growth and social progress has important practical implications for the development of China as a whole. A range of strategies such as the drive for a well-off society in an all-round way, the drive to build a harmonious socialist society and building new socialist countryside puts new and heavier responsibilities on the insurance industry. Through promoting the development of pension and health insurance, the Chinese insurance industry strives to provide old age and medical protection for Chinese people, which accounts for one fifth of the world's population. Through "Three Rural Insurance", i.e. insurance related to agriculture, rural areas and farmers, the Chinese insurance industry will provide agricultural risk compensation for Chinese farmers, which accounts for more than half of the Chinese population, and facilitate the realization of "supporting the old and helping the sick." Through developing liability insurance, the Chinese insurance industry will be able to resolve social conflicts and reduce social frictions and contribute to the stability of the society. In addition to promoting continuous, rapid and healthy development of the national economy, the Chinese insurance industry also engages itself in the mission of improving social security, adjusting income distribution, resolving potential conflict and safeguarding social stability. In China, insurance means more than just financial products. It has a broad social horizon. The development of Chinese insurance industry has important economic significance in terms of its market prospects and commercial value. More importantly, it has great social and political significance in the sense that it promotes social justice and serving the drive to build a harmonious socialist society.

For certain reasons, social awareness of insurance in China is yet to be enhanced and the importance of insurance industry for the construction of a harmonious society is not fully understood. During this new period of constructing a harmonious society, the successful hosting of IAIS Annual Conference will not only spread the advanced thoughts and ideas of international insurance industry in China, but also promote the insurance awareness among the general public. Furthermore, it will directly deepen the understanding of insurance as an important social management tool among the public. This IAIS Annual Conference in Beijing will provide a precious opportunity to push forward China's market-oriented social management and development mode with the aid of insurance to construct a harmonious socialist society.

(China Development Gateway October 11, 2006)