Shanghai unveils reinsurance centre plan
The Shanghai Municipal People’s Government (SMPG) has announced that it will accelerate the construction of its planned Shanghai International Reinsurance Centre (SIRC) to attract fresh reinsurance capacity, improve the nation’s risk management system, more effectively disperse insurance risks, and support the creation of a modern reinsurance market system.
“In order to accelerate the development of [the] country’s reinsurance market, better [support] the insurance industry, and support the construction of a strong financial country, the Financial Regulatory Bureau and the Shanghai Municipal People’s Government jointly issued the ‘Implementation Opinions on Accelerating the Construction of Shanghai International Reinsurance Centre,” stated the regional government.
The plan is based on five key elements and includes the hoped-for establishment of both domestic and international reinsurers and brokers to the centre.
“First, we will provide policy support for institutional access. We will support the establishment of insurance, reinsurance, and insurance brokerage legal entities or branches specialising in reinsurance business in the Lingang New Area, and allow domestic reinsurance companies and foreign reinsurance company branches to establish reinsurance operation centres in the Lingang New Area,” said the SMPG.
“Shanghai will provide incentives for the establishment and capital increase of settled institutions. For qualified personnel working in the Lingang New Area, we will increase the protection of entry and exit, renting, buying, and settling down,” it explained.
The Shanghai governing body said that entrants to the new market will not face potential double taxation when it comes to cross-border premium transfers.
“The cross-border reinsurance premiums carried out through the… trading centre are counted and published in accordance with the principles of domestic new additions and non-duplicate calculations,” said the government.
The plan also includes the creation of a unified and efficient market platform.
It said that domestic insurance companies, reinsurance companies, and insurance brokers would register reinsurance transaction information at the registration and trading centre and register reinsurance contracts, bills, compensation and other information in accordance with the principle of “necessary, minimum, and operable”.
This would create a reinsurance “data concentration and information service platform” and establish and improve a unified reinsurance registration service system, said the SMPG.
The regional government said that it wants to see the development of the reinsurance market in a “steady and orderly” manner.
It said that the focus would be “expanding incremental reinsurance business”, in accordance with the principle of “controllable risks and stable operation”, steadily exploring online and offline transactions in the registration and trading centre, and gradually realising centralised transactions of reinsurance business.
“Shanghai will implement differentiated incentives based on the progress of reinsurance business registration and online transactions, assist insurance institutions to carry out cross-border RMB settlement, and support banks to provide cross-border fund settlement facilities for real and compliant reinsurance business based on the Shanghai Insurance Exchange platform,” said the SMPG.
Finally, the regional government said that it wants the new centre to immediately “go global” and focus on key strategic and specialty risks such as in green shipping and aviation.
“Fifth, enhance the reinsurance protection capacity in key areas. Focus on key areas such as ‘going global’, aviation and aerospace, green shipping, integrated circuits, etc, and explore and carry out pilot projects of risk dispersion mechanisms such as insurance pools in the Lingang New Area. The Lingang New Area Management Committee has set up special support funds to enhance the effective supply capacity of reinsurance in key areas,” it said.
