During a press conference held last week during the National People’s Congress, China Insurance Regulatory Commission (CIRC) Chairman Wu Dingfu annouced that the the CIRC will set up an insurance exchange in Shanghai as part of the Chinese government’s goal of making Shanghai an international finance center. 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.
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The information contained in this article is available at: http://www.chinadaily.com.cn/usa/business/2011-03/07/content_12130923.htm