On September 18, 2013, the State Council issued the long-anticipated master blueprint for the pilot free trade zone in Shanghai, officially named as the China (Shanghai) Pilot Free Trade Zone (the SFTZ). On October 1, 2013, the SFTZ which covers four ports and airport areas in Shanghai, opened for business.
Late in September, with a view to implementing the master blueprint and regulating insurance business operations within the SFTZ, the China Insurance Regulatory Commission (CIRC) published a statement outlining eight initiatives in the SFTZ.
These policy initiatives will be supplemented by detailed rules and aim to create new opportunities across the insurance industry. The eight initiatives focus on:
- Establishing foreign invested professional health insurance companies in the SFTZ to ease the existing 50 per cent foreign shareholding restriction (i.e. allowing the establishment of a wholly foreign owned health insurance company in the SFTZ).
- Encouraging insurers to set up branches/subsidiaries in the SFTZ and carry out Renminbi cross-border reinsurance business, and supporting the research and exploration of catastrophe insurance schemes.
- Allowing insurers within the SFTZ to carry out outbound investments on a trial basis by expanding the scope and ratios of such investments.
- Permitting internationally renowned service companies (including professional insurance intermediaries) and organisations/personnel engaging in reinsurance business to carry out relevant business within the SFTZ.
- Developing marine insurance in Shanghai with measures to grow marine insurance operating entities and individual brokers and the Shanghai marine insurance association.
- Encouraging insurers to create new products and expand the application of liability insurance. Property and casualty (P&C) insurers may see potential growth in marine/cargo insurance and liability insurance which may eventually help diversify P&C insurers’ product portfolios and improve profitability.
- Developing the Shanghai insurance market, including the establishment of insurance entities such as a marine insurance pricing centre, reinsurance centre and insurance funds operation centre.
- Establishing connections and mechanisms to promote financial reform and innovation in the SFTZ and, therefore, growth of Shanghai as an international financial centre.