The China Banking and Insurance Regulatory Commission (CBIRC) has announced the renewal of an agreement that sees the continuation of preferential treatment to the Hong Kong reinsurance industry.
As we reported last year, following more than a year of negotiations, an agreement was reached between the CBIRC and the Insurance Authority (IA) of Hong Kong to allow preferential treatment for qualified reinsurers in Hong Kong.
The preferential treatment comes under the China Risk Oriented Solvency System (C-ROSS) regime, and sees mainland Chinese insurers that cede business to qualified reinsurers in Hong Kong benefit from a lower reinsurance credit risk charge.
Previously, Hong Kong reinsurers were grouped with other offshore reinsurers and assigned baseline risk charge factors for credit risk exposure that were considerably higher than those for onshore reinsurers.
It’s now been announced by both the IA and the CBIRC that an agreement has been made to continue the preferential treatment for another year, until June 30th, 2020. According to the CBIRC, the preferential treatment has been very positive and played a key role in promoting the development of the reinsurance markets in both China and Hong Kong.
Chief Executive Officer (CEO) of the IA, Clement Cheung, commented: “In the past year, the preferential treatment has strengthened the cooperation of the cross-border insurance business and demonstrated that Hong Kong has actively participated and assisted in constructing the infrastructure along the Belt and Road, positioning Hong Kong as a risk management center.”
