Lujiazui Forum 2013 is being held from June 27 to 29 in Shanghai, theming at“A New Vision for Financial Reform and Opening Up.”During the second thematic cession, “China's Financial Reform and Opening Up & Economic Transformation and Upgrading,” Xiang Junbo , Chairman of the China Insurance Regulatory Commission (CIRC) gives a keynote speech. He points out the necessity to put forward reforms in insurance industry’s business model, so as to promote the industry’s competitiveness, creating a new situation featured in plenty products, various channels and excellent service.

The following is a transcript of his speech:

Honorable mayor Yang Xiong, president Shang Fulin, deputy major Tu Guangshao, dear friends, ladies and gentlemen. I am very happy to meet everybody again by the beautiful Huangpu River, and discuss the major issues related to the development of financial industry. Deepening financial reform, improving the promotion of macroeconomic stability, Supporting modern financial system of real economy’s development, are profound lessons learned by the CPC Central Committee from the global financial crisis. It is at a time when reforms in China's financial sector have entered a crucial stage. They are also a major strategic decision on the basis of a comprehensive grasp of the changing situation of China's financial development.

There is no doubt that the forum has grasped the core issue of financial industry, and also the issue that gains most attention from the society by taking reforms and opening up in the financial industry as its theme. To the insurance industry, where is the driver for deepening reforms? How to provide the market with a new engine and inject vitality to the industry through reforms? These are all questions deserve our discussion and study.

The history of the insurance industry is all about putting itself in the profound waves of the countries reforms and opening up, innovation and continuous opening up. Domestic commercial insurance was resumed in 1980, and in the following 309 years, the industry maintained fast and healthy development through promoting the market entity, institutional innovation, and reforms in insurance regulation. The industry has stepped on a much higher stage.

At the beginning of Reform and Opening up, there was only one insurance company in China. Total premium was 4600 million yuan. But by the end of last year, there are 165 insurance companies with a total premium of 1.55 trillion yuan. Total assets of all insurance companies was over 7.35 trillion yuan, with net asset 792 billion yuan. Some companies are becoming stronger and stronger with increasing influence. 12 Chinese companies were listed on the “Fortune” magazine’s Top 500 in 2012. Four of them are insurance companies, including China Life, PICC, Ping An Insurance and China Pacific Insurance, accounting for one third of all Chinese companies listed. Insurance services are now extending to various areas relating to the country’s economic development and people’s daily life. It plays an irreplaceable role in putting forward the urbanization process, and forming a protective safety network for the people.

On one hand we see the achievements, but on the other, we should also notice that there are still problems in service width and ability. It doesn’t fit with the demands of economic development, and the overall objective of building a moderately prosperous society. The need is urgent to deepen reforms to stimulate the industry’s vitality, and continuously promote a healthy development of the insurance industry. China ranks the second in terms of GDP in the world, but its insurance industry ranks the sixth, not a proper match. Secondly, judging from developed western countries, insurance should account for 25 percent to 30 percent of the total financial asset. But in China, the figure is between 8% and 9%. So in the next ten to twenty years, there is still a large space for development. Its healthy development can only be achieved through reforms.

Ladies and gentlemen, the fast development of the insurance industry relied on reform. And the future healthy development of the industry still needs reform. If we say previous reforms have solved the problem of existence, making insurance industry growing larger, we can also say the future reforms would be focused on solving the problems of insurance industry’s development. They would be changing China from a large insurance country to a strong one. We would consider carrying out reforms in the following four aspects.

The first is to put forward reforms in the industry philosophy, in order to set a new layout feature by global development, total coverage and multi-level service. One important experience from the previous 30 years is that we need to adapt to the demand of society, and achieve development by service the overall situation. With improvement in socialist market economic system, government would tend to carry out its functions through the market. As market-based risk management instruments, the insurance industry need to get out break the limits and play a greater role in the process of improving the socialist market economic system.