On 29 September 2013, the much-anticipated China (Shanghai) Pilot Free Trade Zone (“Pilot Zone”) opens up. The Pilot Zone is established on the basis of Shanghai’s four existing bonded zones – Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone. At the launch ceremony, Gao Hucheng, the Commerce Minister, said that the creation of the Pilot Zone was a crucial decision for China’s next wave of reform and opening-up.
On the same day, the China Insurance Regulatory Commission (“CIRC”) responded positively (“Reply”) to the master blueprint released by the Central Government on 27 September 2013, supporting the development of insurance sector in the Pilot Zone. In accordance with the Reply, the CIRC will take measures to encourage the development of healthcare insurance, reinsurance and insurance intermediary business in the Pilot Zone. The unveiled plan of the CIRC includes the followings:
- Supporting the establishment of foreign invested professional health insurance institutions in the Pilot Zone on a pilot basis
- Supporting insurance companies to set up branches in the Pilot Zone for the purpose of carrying on RMB cross-border reinsurance business; supporting Shanghai to research and explore on catastrophe insurance mechanism
- Supporting the insurance companies in the Pilot Zone to make pilot overseas investment; actively studying the pilot expansion in scope and proportion of overseas investment by insurance companies within the Pilot Zone
- Supporting internationally well-known professional insurance intermediaries and other service providers, and other social organisations and individuals that conducting reinsurance business to operate the relevant business in the Pilot Zone in accordance with laws and regulations; providing professional technical supporting services to the development of the insurance industry
- Supporting Shanghai to carry on shipping insurance, nurture shipping insurance operators and shipping insurance brokers team, developing Shanghai Shipping Insurance AssociationS
- Supporting insurance companies to innovate insurance products and continuously expand liability insurance servicesS
- Supporting Shanghai to improve its insurance market system, promoting the construction of functional insurance institutes such as shipping insurance pricing centre, reinsurance centre and insurance funds utilisation centre
- Supporting the establishment of a linkage mechanism between the financial reform and innovation in the Pilot Zone and the construction of Shanghai International Financial Centre; continuing to strengthen and expand the co-operative memorandum working mechanism between the CIRC and the Shanghai municipal government.
The detailed rules for the above plans are yet to be released by the CIRC. It is however indicated that the specific rules are expected to be introduced within the next three years.
The Pilot Zone is a testing ground for reform on a nation level. It is said that the establishment of the Pilot Zone “will play an important role in China’s next round of reforms and opening up”, which may create great opportunities for the insurance industry