The reform of financial regulation is reshaping the bond management ecosystem of insurance institutions, which has a profound impact on the financial accounting system, information disclosure mechanism, operational processes, and capital management.

The PBBD project (REF 2019-21) implemented by the National Association of Insurance Supervisors (NAIL) marks a fundamental shift in regulatory models from rule-based to principle based. This reform aims to more accurately reflect the essential characteristics of financial instruments by restructuring bond classification standards, strengthening financial information transparency and precision in risk capital management.

Faced with the increasingly complex innovation of financial instruments, this reform not only requires the improvement of asset identification capabilities, but also forces the industry to build a high-level analysis system. The following text will analyze the multidimensional impact of this strategic transformation on insurance institutions, covering accounting practices to investment strategy decision-making, while exploring the issue of regulatory pressure escalation accompanied by discretionary power.

Key implementation elements

As the implementation deadline approaches, insurance institutions urgently need to conduct systematic evaluations, comprehensively predict the chain effects of the new regulations on investment portfolios, and be prepared to respond.

The primary task is to reshape the accounting policy framework. The principle oriented classification system requires the improvement of professional judgment ability, which has a direct impact on the measurement of venture capital. The transition of asset classification standards from Schedule D to Schedule BA may prompt insurance institutions to re-examine their position structure and investment strategies, and construct a new management model that is compatible with regulatory guidance.

Another key point is the upgrading of information disclosure requirements. Asset reclassification will generate new data collection and analysis requirements, which may trigger IT system transformation projects. Maintaining collaborative innovation with technology suppliers will be an important guarantee for meeting updated disclosure standards.

In addition, bond classification evaluation will be embedded in the front-end process of investment decision-making, directly affecting the design of trading agreements. This requires the establishment of a sound process control mechanism to ensure a smooth transition during the implementation of the new regulations.

Phased implementation path

Based on industry practice experience, it is recommended to adopt a three-stage implementation framework to achieve the organic unity of regulatory compliance and business development:

Phase 1: Risk identification and framework construction

Focus on building a risk oriented evaluation system and selecting asset categories that require special attention. Develop process visualization tools and standardized checklists to provide methodological support for subsequent portfolio reviews.

Phase 2: Asset Classification and Impact Assessment

Comprehensively sort out the risk characteristics of various asset categories, use the methods and tools constructed in the early stage, and accurately identify the securities varieties that need to be adjusted in classification. Synchronize the preparation of classification based documents, conduct impact analysis of operational changes, and lay the foundation for the implementation phase.

Phase Three: System Refactoring and Validation

Promote multidimensional operational changes, covering areas such as financial accounting, information disclosure, capital management, and investment strategy optimization. The key points include updating the system process documents, developing a system transformation plan (including requirement documents, test cases, and problem tracking mechanisms), and ultimately forming a statutory investment plan that meets the requirements of the new regulations.

Industry outlook

The insurance industry is currently at a critical juncture of regulatory transformation, and the implementation date of January 1, 2025, will be an important watershed. Institutions need to organically integrate compliance requirements with strategic planning, while maintaining market competitiveness while meeting regulatory standards.

The complexity of the implementation process requires a structured promotion strategy: from risk identification to asset review, ultimately completing the upgrade of the operational system. This progressive path helps to achieve coordinated development of accounting policy optimization, investment strategy adjustment, and information disclosure mechanism reform, ensuring comprehensive compliance with regulatory guidance. Through systematic implementation, insurance institutions can not only meet the challenges of regulatory changes, but also take this opportunity to improve their risk management level and enhance their market competitiveness.