Feb. 8, 2007 (China Knowledge) – Insurers in China have to set up an internal ratings system for bond investments, the China Insurance Regulatory Commission (CIRC) said.

The insurance regulator said that credit defaults are the biggest risks that insurers could face, and that a risk assessment system can help the firms ensure their asset security and improve their competitiveness.

A credit rating system should be two-tiered, with both the bond issuer and the bond itself being assessed, and that every insurers must build up rating models tailored to its own specifications.

Chinese insurers are allowed to buy bonds like treasury bonds, bonds of financial institutions and corporate bonds.