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Belt and Road Weekly

Shanghai strives to build itself into international reinsurance center

November 07, 2019


Abstract : Shanghai plans to build itself into a reinsurance center characterized by diversified players, open markets and controllable risks and matching China's insurance market size and Shanghai's status as an international financial center.

Shanghai plans to build itself into a reinsurance center characterized by diversified players, open markets and controllable risks, and matching China's insurance market size and Shanghai's status as an international financial center, Wu Qing, deputy mayor of Shanghai, said at the First Lujiazui International Reinsurance Conference opened on November 4 in Shanghai.

According to Wu, Shanghai will intensify efforts to establish a reinsurance market system that welcomes participation of both domestic and foreign market players, embraces free flow of resource factors and stays connected with other financial markets.

Many representatives from insurance companies at home and abroad hold that China's reinsurance market still has a huge potential for development, and expect China to further internationalize this sector to make it a bigger driver in global risk governance.

As an important tool for risk governance, reinsurance can effectively dull the impact of major, huge and special losses on the real economy. As China becomes the world's second largest insurance market, the domestic reinsurance market has seen a boom.

-- Shanghai owns unique advantages for building international reinsurance center

Shanghai's effort to become an international financial center is an international strategy, said Wu, adding that under the guidance and support of relevant authorities, Shanghai is well on track towards an international financial center that matches the city's economic strength as an international metropolis and the international status of RMB.

According to Wu, by taking expanding opening-up, deepening reform and innovation, attracting superior resources, enhancing the role of market and preventing financial risks as the starting point, Shanghai is speeding up construction of a global asset management center, a cross-border investment and financing service center, a financial science and technology center, an international insurance center, a global RMB asset pricing and settlement center, as well as a financial risk management and stress testing center in an attempt to form an international first-class financial ecosystem.

Among others, the international insurance center is seen as an integral part of this effort. Establishing a regional or even international reinsurance center holds the very key to achieve the goal of constructing a hub city connecting domestic and foreign insurance resources.

Wu pointed out that Shanghai enjoys unique advantages as it looks to become an international reinsurance center.

On the one hand, the city has gathered a large number of domestic and foreign financial and insurance institutions and embraced complete reinsurance transaction elements. Data shows that there are as much as 115 insurance companies in Shanghai, with the insurance assets they managed making up more than half of China’s total.

On the other hand, China launched a new Lingang area of the China (Shanghai) Pilot Free Trade Zone (SHFTZ), provided strong support for Shanghai's building of an international financial center and a scientific innovation center, improved the capital market system, and upgraded the integrated development of Yangtze River Delta region to a national strategy. These will further deepen reform and opening-up and create new opportunities for Shanghai to forge an international reinsurance center.

-- Opening wider and faster brings double benefits

Many senior executives of Chinese and foreign insurance companies said at the conference that as China has recently introduced a series of new opening-up measures for the financial sector, the sector is opening wider and faster. Against the backdrop, China's reinsurance market is bound to embrace double benefits of preferential policies and fast-growing businesses.

Previously, about 11 innovation measures introduced by the office of financial stability and development committee under the State Council have brought significant historical opportunities for Shanghai to build an international reinsurance center.

Under the sound guidance of financial regulators, Shanghai will actively integrate into the international reinsurance market. In the meanwhile,the city will pilot offshore reinsurance transactions, complete the reinsurance registration system, strengthen the innovation and underwriting capabilities of the reinsurance market, create a more enabling environment for reinsurance development and enhance Shanghai's efforts to become a leading reinsurance talent hub in a bid to improve the city's ability to allocate global reinsurance resources as an international financial center, Wu added. 

Moreover, Shanghai Insurance Exchange will also serve as a driving force for facilitating the construction of the international reinsurance center.

Zhou Yanli, former vice chairman of China Insurance Regulation Commission, Shanghai Insurance Exchange has become an important carrier and platform for promoting the establishment of a reinsurance pricing and trading center, as its explorations on gathering market institutions, innovating trading scale and improving trading efficiency has made significant progress.

According to Zhang Yuxiang, director of Lujiazui administration bureau of the shanghai free trade zone, Lujiazui Financial City's next move is to emerge as a first-class international financial city like London, New York and Singapore, and it will give full play to the shanghai free trade zone's institutional innovation advantages and focus on headquarters economy, global asset management, building economy and business environment so as to better develop a world-leading resource allocation highland, make the financial industry an ever stronger driver, promote the high-quality development of competitive industries and improve international industrial ecology and competitiveness.

(Edited by Yang Yifan, [email protected])

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Keyword: reinsurance-market

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