During a press conference held last week during the National
People's Congress, China Insurance Regulatory Commission (CIRC)
Chairman Wu Dingfu announced that the CIRC will set up an insurance
exchange in Shanghai as part of the Chinese government's goal
of making Shanghai an international finance centre. This official
announcement shows that the CIRC is serious about setting up an
exchange. Yet, at present this announcement probably should just be
considered a statement of their intentions because the CIRC did not
offer any details on what the purpose of that exchange will be or
who will participate in that exchange.
There has been some speculation about the types of products that
will be offered through the exchange and who will able to
participate in it, but since there are no details at all about the
exchange, including the fact that the CIRC did not provide a time
line on when it expect to open the exchange, there is no way of
knowing what to expect of a the potential Shanghai insurance
exchange. However, the speculation is interesting because by
considering opening an exchange it sounds like the CIRC could be
open to more innovation in the Chinese insurance market, and some
individuals have speculated that the CIRC is considering making the
exchange more of a place where property and casualty policies,
group life insurance policies, and reinsurance could be quickly and
easily bought and sold, instead of a place where hard to place
risks and excess or surplus lines are placed. In addition, if
reinsurance if going to be available through the exchange it raises
the possibility that foreign insurers and reinsurers will be able
to be involved in the exchange in some capacity because China's
WTO commitments state that China allow international insurers to
write reinsurance business from outside of China.
If you would like more information about what a insurance
exchange could potentially mean for the Chinese insurance market
please contact us.
Contractors and principals should ensure they have appropriate insurance coverage instead of relying on indemnity clauses.
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