China launched its first insurance exchange platform, Shanghai Insurance Exchange (SHIE), on 12 June. The CNY2.235-billion (US$341 million) comprehensive insurance service platform aims to serve insurers and consumers globally.
It is understood that SHIE will combine the insurance practices of the British market, especially LIoyd’s practices, and the American market, especially the New York Insurance Exchange and New York Cat Insurance Exchange.
SHIE’s functions include: launching and registering insurance products; trading of insurance products and related services; providing administrative support for exchange platforms; and offering a platform for reinsurance business, according to reports from Shanghai.
A source said that initial plans for SHIE provide for the setting up of: a direct insurance business exchange platform, reinsurance business platform, insurance asset management platform and other related insurance products exchange platform.
SHIE to take over from CIRC certain functions
Under the reinsurance business platform, membership will be open to international reinsurers that do not have subsidiaries or branches in China. SHIE will take over from CIRC membership registration and regulatory functions to SHIE for overseas reinsurers conducting business with Chinese direct insurers or reinsurers.
Mr Mark Tucker, Group Chief Executive and president of the AIA Group, said SHIE represents an effort to increase the transparency and efficiency of the insurance market in China. He said the increasing demand for insurance in China requires more products in the market.
Boost Shanghai’s voice in the global insurance industry
Shanghai Executive Vice Mayor Tu Guangshao said: “The new bourse will further diversify Shanghai financial markets’ function while promote the gathering of international insurers and reinsurers in the city and boost Shanghai’s voice in the global insurance industry.”
First mooted in 2010, SHIE is tasked to align local businesses to global insurance practices and channel risk to be diversified outside of the insurance market via the capital market.
SHIE has 91 shareholders, 75% of whom are from China insurance industry and the remaining 25% from non-insurance sectors. CIRC has appointed Mr Zhen Yu Qing as SHIE Chairman. Mr Zhen was previously the head of CIRC’s Insurance Fund Management Regulatory Department.