China, by fully harnessing the power of market mechanisms, particularly through the utilization of commercial insurance products and services, will intensify efforts to elevate the overall quality and effectiveness of insurance coverage, the State Council, the country's Cabinet, said on Friday.

It was emphasized at the State Council Executive Meeting chaired by Premier Li Qiang that the insurance sector serves as a critical pillar in enhancing social well-being, managing disaster mitigation and bolstering the real economy.

The market size of China's insurance sector ranks second worldwide. As of the end of July, its total assets reached 33.9 trillion yuan ($4.78 trillion), marking an increase of 7.7 percent compared with the beginning of the year, said the National Financial Regulatory Administration.

As of the end of July, the comprehensive solvency ratio stood at 195.5 percent, and the core solvency ratio came in at 132.4 percent. In the first seven months, insurance companies paid out a total of 1.39 trillion yuan in claims and benefits, up 30.2 percent year-on-year, official data showed.

Yin Jiang'ao, director of the administration's Property and Insurance Supervision Department, said at a news briefing earlier this month that in the first half, China grappled with the aftermath of natural disasters that took a substantial economic toll, with direct economic losses estimated at around 93.2 billion yuan.

This figure starkly contrasts with the corresponding period last year, where losses amounted to 38.2 billion yuan, Yin said, adding that insurance payouts constituted only about 10 percent of disaster-related economic losses in the first half of this year.

During the same period, the world faced a series of natural disasters that led to significant economic losses, estimated at around $120 billion globally. Among these losses, insurance payouts accounted for some $60 billion, representing roughly 50 percent of total economic damages, he said.

This disparity indicates considerable room for improvement in insurance coverage and risk management, he added.

Going ahead, by closely monitoring key industries and addressing weak areas, relevant government authorities aim to strengthen consumer protection measures, enhance market integrity and establish a comprehensive framework for risk mitigation, it was stated at the meeting.

In addition, through concerted efforts to encourage the growth of patient capital, enhance assessment frameworks and dismantle institutional barriers, China aspires to lay the groundwork for a flourishing investment environment that fuels capital markets and technological innovation, the meeting added.

Wang Shengbang, director of the Legal and Regulation Department of the administration, said that at the end of June, insurance companies extended insurance coverage amounting to 6 trillion yuan to safeguard against risks in technological research and development, technology transfer and the dissemination of technological innovations.

In a related development, insurance funds have been actively involved in long-term equity investments, contributing a total of 2.7 trillion yuan by the end of July, Wang added.