The China Banking and Insurance Regulatory Commission (CBIRC) has announced it will extend the preferential treatment afforded to Hong Kong under its solvency system for another year.
The decision means mainland insurers who cede business to local reinsurers can continue to enjoy lower capital requirements until 30 June 2021.
According to the CBIRC, the continuation of preferential treatment under the China Risk Oriented Solvency System will help to strengthen mutual trust in insurance supervision while increasing market efficiency.
The regulator added that these benefits are conducive to global diversification of insurance risks in the mainland and promoting joint development of the insurance market with Hong Kong.
Furthermore, the CBIRC suggested that preferential treatment has laid a “solid foundation” for Hong Kong to sustain its support for both the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area development.
“This will in turn serve to reinforce our role as an international financial centre,” the Commission explained.
The Equivalence Assessment Framework Agreement on Solvency Regulatory Regime was signed between the former China Insurance Regulatory Commission and the former Office of the Commissioner of Insurance on 16 May 2017.
Based on this the preferential treatment was granted by the CBIRC to Hong Kong in July 2018, subsequently extended until 30 June 2020.
