The State Financial Regulatory Commission and the Shanghai Municipal People’s Government have issued a joint notice for the re/insurance industry outlining measures to accelerate the development of the Shanghai International Reinsurance Center.
The Shanghai International Reinsurance Center officially launched in October 2024, building on the establishment of the international board for reinsurance trading, and the Shanghai Global Reinsurance Platform in 2023.
In order to develop Shanghai into a global reinsurance hub, China’s National Financial Regulatory Administration and the Shanghai municipal government have outlined a number of steps required to thoroughly implement the CPC Central Committee’s strategic plan and the State Council’s support for Shanghai, with a view to building a leading reinsurance centre and promoting the high-quality development of China’s reinsurance market.
These steps include optimising the institutional layout to facilitate the smooth flow and efficient allocation of various factors of production within the Lingang New Area of China and Pilot Free Trade Zone (Lingang New Area).
The document encourages large enterprises to manage their risk protection centrally in the Lingang New Area, and promote precise matching between risk and underwriting capacity.
Another key step is to promote the unified registration of reinsurance contracts, claims, and other information by domestic insurance institutions at the reinsurance registration and trading centre. The goal is to support the reinsurance registration and trading centre by further improving data standards, implementing hierarchical and classified data management, and strengthening data governance and security management in accordance with laws and regulations.
Additionally, the government plans to support overseas reinsurers and reinsurance brokers in conducting referral work through the reinsurance registration and trading centre, promoting the participation of overseas insurance institutions in the Chinese reinsurance market and expanding platform transactions.
It will also work to support reinsurance institutions in increasing capital and issuing capital replenishment instruments to enhance their internal and external capital accumulation capabilities and strengthen the reinsurance industry’s overall strength.
The notice calls for an exploration and broadening of channels for diversifying special risks like catastrophic risks. It will support insurers in opening dedicated custody accounts and dedicated fund settlement accounts in the Lingang New Area, and make good use of policies facilitating overseas investment of cross-border reinsurance inflow income.
The government plans to leverage the advantages of the Lingang New Area in the cross-border sector, to attract insurers to expand into more incremental markets and enhance their cross-border reinsurance business management capabilities.
The document said, “We will support insurance institutions in introducing cutting-edge risk modelling and underwriting experience and cultivating core technologies. We will improve the international reinsurance consultation mechanism, creating a platform for gathering global wisdom and a window to expand opening up, promptly showcasing the achievements of Shanghai’s international reinsurance center construction, and continuously enhancing its international influence.”
The notice also calls for strengthening the primary responsibilities of insurers, urging them to establish and improve internal control and compliance management systems, and enhance the management of operational risks and cross-border capital flows.
The government asks to support the Shanghai Financial Regulatory Bureau in researching and establishing a monitoring system adapted to reinsurance risks, improve the penetration and effectiveness of risk monitoring for cross-border reinsurance and on-exchange transactions, and maintain the safe and stable operation of the Shanghai International Reinsurance Center.
Lastly, the notice urges support for the Lingang New Area in further optimising its institutional incentive policies and improving its policies specifically for reinsurance talent and exploring the establishment of a reinsurance arbitration mechanism in the Lingang New Area to improve alignment with international commercial rules.
