The Chinese financial regulator, the CBIRC, is extending preferential treatment for the Hong Kong insurance industry under the China Risk Oriented Solvency System for another year to 30 June 2021.
The preferential treatment allows mainland insurers which cede businesses to qualified local professional reinsurers to enjoy lower capital requirements, says the Hong Kong Insurance Authority in a statement.
The CBIRC said that continuation of the preferential treatment would help to strengthen mutual trust in insurance supervision while increasing market efficiency and enhancing supervisory effectiveness, which are conducive to global diversification of insurance risks in the mainland and promoting joint development of the insurance market with Hong Kong.
The Insurance Authority pointed out that introduction of the preferential treatment has fostered a close and stable collaborative relationship between the insurance sectors in Hong Kong and the mainland, laying a solid foundation for Hong Kong to sustain its active participation and support in both the Belt and Road Initiative and the Guangdong-Hong Kong-Macau Greater Bay Area development. This will in turn serve to reinforce Hong Kong’s role as an international financial centre.
The Equivalence Assessment Framework Agreement on Solvency Regulatory Regime was signed between the former CIRC and the former Office of the Commissioner of Insurance on 16 May 2017, based on which the preferential treatment was first granted by the CBIRC to Hong Kong in July 2018, and subsequently extended until 30 June 2020.