What’s new: China will issue detailed implementation rules for establishing an international reinsurance trading market in Shanghai, the financial regulatory agency said Wednesday.
Shanghai, already China’s financial center, has sought since 2019 to develop a global reinsurance hub to rival London, Hong Kong, and Singapore. It issued guidelines in 2021 to advance the effort.
Since then, China’s central government and the Shanghai municipal government have been actively working on the strategic structure, rules and policy support to promote the project, said Zhang Zhongning, deputy director of the General Office of the National Administration of Financial Regulation, at a press conference Wednesday in Shanghai.
According to the guidance, an international reinsurance zone will be built in the Lingang New Area of the Shanghai Free Trade Zone to create a global reinsurance trading market.
The background: Reinsurance, often referred to as insurance for insurance companies, is when an insurance business signs contracts to protect itself from the risk of loss.
China’s reinsurance industry is mainly supported by domestic businesses, and international influence and competitiveness are still limited. By contrast, in the U.K.’s reinsurance market Lloyd's of London, local businesses account for just 10% of transactions. In Singapore, the proportion is about 20%.
To compete with other global reinsurance hubs, the key for Shanghai will be preferential tax policies and finding its own positioning and characteristics, industry insiders said.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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