China to offer Hong Kong reinsurers preferential treatment for huge BRI premiums

The China Banking and Insurance Regulatory Commission (CBIRC) has agreed to provide preferential treatment to Hong Kong reinsurers as Chinese insurers seek to cede business to the international market and will reveal details of the plan soon, according to the Hong Kong Insurance Authority (IA). During the recent Belt and Road Summit that was organised to explore the immense opportunities from the massive Belt and Road Initiative (BRI), Simon Lam, executive director of general business at the IA, gave details. He said that under the Equivalence Assessment Framework Agreement on the Solvency Regulatory Regime between the mainland and Hong Kong, a lower capital charge will be applied to mainland insurers if they cede business to qualified reinsurers in Hong Kong. “This measure will encourage mainland insurers to give priority to Hong Kong reinsurers when they consider ceding business offshore. Details will be announced by the CBIRC soon,” said Mr Lam. The IA explained that it hosted a breakout session at the Belt and Road Summit to explore the “immense” opportunities from the BRI, which it said could strengthen Hong Kong’s role as a risk management centre. The BRI is expected to generate as much as $28bn in premium by 2030. The forum, entitled ‘Using Hong Kong as a Centre for Risk Management of Belt and Road Projects’, brought together a panel of experts from insurance, reinsurance, insurance broking and captive companies. The IA said the panel identified the different risks faced by overseas assets and businesses under the BRI, provided insights into how insurance can help investors manage these risks, and examined ways in which Hong Kong can use its strengths to complement national policies and support mainland enterprises to “go regional and global”. “The Hong Kong insurance industry is well positioned to provide professional risk management services and effective insurance coverage for BRI projects,” said Mr Lam. “The IA is committed to strengthening Hong Kong’s role as the ideal risk management centre for BRI projects and to encouraging insurance and reinsurance placement in Hong Kong by related stakeholders,” he added. During the forum, Mr Lam also mentioned that the IA plans to launch an insurance facilitation platform to connect enterprises that are involved in BRI projects and commercial activities to a talent pool of insurance services providers and other related professional services providers. “In preparation for setting up such a platform, the IA will meet potential partners and other stakeholders in the coming months to listen to their views and better understand their needs,” he said. The IA also recently revealed that it has created an expert panel to help it prepare a cybersecurity strategy and ensure that this risk is being tackled properly. The plan was revealed by Dr Moses Cheng, chairman of the authority, during a speech at the recent Asian Forum of Insurance Regulators. “Cybersecurity poses another major challenge to the insurance industry. As the world embraces new technology and digitalisation, our industry is moving fast to develop insurance solutions to address the ever-rising risks that cyber presents. At the same time, insurers themselves are being exposed to more frequent cyberattacks and vast potential losses from cyber events,” explained Dr Cheng. “As the regulators, we have to closely monitor the cyber risk management and control systems of insurers to ensure that they align with international best practices. The IA has recently formed an expert panel to help us formulate a cybersecurity strategy. The sharing of experience from your jurisdictions will be most welcome,” he told fellow regulators.

China to offer Hong Kong reinsurers preferential treatment for huge BRI premiums

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