The State Financial Supervisory Commission and the Shanghai Municipal People’s Government jointly issued a notice on the reinsurance industry, proposing measures to accelerate the development of the Shanghai International Reinsurance Center.
Following the establishment of the International Reinsurance Trading Board and Shanghai Global Reinsurance Platform in 2023, the Shanghai International Reinsurance Center will be officially launched in October 2024.
In order to build Shanghai into a global reinsurance center, the State Financial Supervisory Authority and the Shanghai Municipal Government have proposed a number of measures to thoroughly implement the strategic deployment of the Party Central Committee and the State Council’s support for Shanghai, build a first-class reinsurance center, and promote the high-quality development of China’s reinsurance market.
These measures include optimizing the institutional layout and promoting the smooth flow and efficient allocation of various production factors in China’s Lingang New Area and Free Trade Pilot Zone (Lingang New Area).
The document encourages centralized management of risk protection for large enterprises in the Lingang New Area to promote accurate matching of risks and underwriting capabilities.
Another key step is to promote domestic insurance institutions to uniformly register reinsurance contracts, claims and other information in the reinsurance registration and trading center. Further improve data standards, implement hierarchical and classified management of data, strengthen data governance and security management in accordance with laws and regulations, and support the construction of reinsurance registration and trading centers.
In addition, support overseas reinsurance companies and reinsurance brokers in carrying out referral work through the Reinsurance Registration and Trading Center, promote overseas insurance institutions to participate in the Chinese reinsurance market, and expand platform transactions.
Support reinsurance institutions to increase capital, issue capital supplementary instruments, enhance internal and external capital accumulation capabilities, and enhance the overall strength of the reinsurance industry.
The notice requires that we explore and expand channels for diversifying special risks such as catastrophe risks. Support insurance companies to open special custody accounts and special fund settlement accounts in the Lingang New Area, and make good use of the policy to facilitate overseas investment of cross-border reinsurance inflow income.
Lingang New Area’s cross-border advantages will be leveraged to attract insurance companies to expand into more incremental markets and enhance cross-border reinsurance business management capabilities.
The document states, “Support insurance institutions to introduce cutting-edge risk models and underwriting experience, and cultivate core technologies. Improve the international reinsurance consulting mechanism, create a platform that gathers global wisdom and expand the opening window, timely display the results of the construction of the Shanghai International Reinsurance Center, and continuously enhance international influence.”
The notice also requires strengthening the main responsibilities of insurance companies, urging insurance companies to establish and improve internal control and compliance management systems, and strengthen the management of operational risks and cross-border capital flows.
Support the Shanghai Monetary Authority in researching and establishing a monitoring system suitable for reinsurance risks, improve the penetration and effectiveness of cross-border reinsurance and on-exchange trading risk monitoring, and maintain the safe and stable operation of the Shanghai International Reinsurance Center.
Finally, the notice requires support for the Lingang New Area to further optimize institutional incentive policies, improve reinsurance talent policies, explore the establishment of a reinsurance arbitration mechanism in the Lingang New Area, and improve its integration with international business rules.
