The China Insurance Regulatory Commission (CIRC) has revealed that Shanghai has applied to the central government for approval to establish an insurance exchange, as part of Shanghai's drive to become a major international financial hub by 2020.

Shanghai set up two shipping insurance centres in December 2010 which have already provided a boost to the city's insurance services. It is expected that the proposed plan for an insurance exchange will provide Shanghai's insurance industry with the extra boost that it requires to fulfil its ambitious growth plans.

The proposal for a new insurance exchange first materialised in June 2010. Although no details of the proposal have been announced by the Chinese government, it is believed that the exchange will initially provide a centralised trading platform for reinsurance, property insurance, liability insurance and group life insurance products. Risk securitisation derivatives are expected to be offered at a later date to spread the risk from the insurance market to the securities market. Participants in the exchange are likely to include foreign insurers.