China - insurance regulators visit to the UK
Published 28 January 2015
© Crown copyright 2015
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/china-insurance-regulators-visit-to-the-uk/china-insurance-regulators-visit-to-the-uk
This publication was archived on 4 July 2016
This article is no longer current. Please refer to Overseas Business Risk - China
Summary
UK shares its expertise and practices on maritime insurance with China as it grows and opens up its market. On a three-day programme in London, China’s insurance regulators learned from British authorities and professionals about UK’s legal system and market dynamics for maritime insurance. What China plans to do.
Detail
Between 12-15 January, British Embassy funded and accompanied a delegation of five from China’s insurance regulator CIRC, to meet with UK’s financial authorities and business community on maritime insurance. A roundtable organized by City of London gathered 16 market professionals representing UK’s plural and robust maritime insurance ecosystem, a visit to Lloyd’s of London demonstrating how a broker-led market operates, and policy dialogues with British regulators (FCA & PRA) inspired the delegation with UK’s regulatory philosophy.
The UK is a global leader on maritime insurance, and Lloyd’s occupies a significant share in this highly technical niche. Conversations and discussions had with different players in London made sure UK’s recipe was clearly explained to the Chinese delegates. It includes: a transparent and stable English law system with high predictability, a strong cluster of financial and professional services that offers one-stop shop solutions in common language, and a globally trusted level playing field with first-rate professional ethics.
Chinese regulators and policy planners appreciated UK’s strengths in that, similar to the UK’s position back in 17th Century, China is the world’s manufacturing and international trade centre today, however its maritime insurance sector largely lags behind. Overall, China’s insurance sector in terms of size is equivalent to the UK with a total premium income of over 200 bln GBP in 2014, expected to reach 500 bln GBP by 2020 as the second largest after US.
In detailed discussions with British interlocutors, Chinese delegates identified key policy challenges: (1) China’s maritime law and alternative dispute resolution system are underdeveloped; (2) lack of technical knowledge as well as self-regulation often leads to disputes and amplifies risks; (3) China’s capital and forex control could slow down payment process; (4) cluster of professionals is yet to be developed to meet the requirements of complex international business; and (5) misperceptions in international market about China’s maritime sector.
What the Chinese are planning to do?
-
Deregulation: insurance companies no longer need approvals before they sell products except for auto insurance. A filing system has been in place for companies to register products ex post facto (within 15 working days). Similar deregulation on auto insurance (which represents 70% of China’s property insurance market) is underway.
-
Solvency II’: soon to launch the ‘China Risk Oriented Solvency System’ (C-ROSS) that is designed in agreement with the principles set out by the International Association of Insurance Supervisors, and seeks to enhance risk management and capital efficiency.
-
Shanghai FTZ: a shorter negative list to open up market, greater delegation of regulatory power to local authority over products and pricing, international arbitration for maritime disputes, and an insurance exchange to serve as a centre for pricing, securitization and risk diversification, and to facilitate clustering.
Comment
There is a clear agreement between British insurance professionals and Chinese regulators about the potential of China’s insurance market, as well as the UK’s offer. After several incremental moves in more than ten years time, Lloyd’s started to operate branches and directly write business in China last year.
Disclaimer
The purpose of the FCO Country Update(s) for Business (”the Report”) prepared by UK Trade & Investment (UKTI) is to provide information and related comment to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.