Shanghai hopes to set up insurance exchange
February 28, 2011 Category Finance, Weekly
Shanghai has applied for central government approval to set up an insurance exchange. Xu Wenhu, Director of the Insurance Research Center at Fudan University and head of the research group for the proposed exchange, said the municipal government recently completed preliminary work and submitted a proposal to the Chinese government. The exchange is expected to become a major market for reinsurance products. Participants will “probably” include foreign insurers, Xu told the China Daily. The exchange will initially trade liability insurance, reinsurance, and property and group life insurance products. It will offer risk securitization products, catastrophe bonds and insurance derivatives, to spread the risk from the insurance market to the securities market, at a later date. Shanghai aims to become an international financial center by 2020, but the development of the city’s insurance industry lags behind activity in banking and securities. “The insurance exchange is one of the most important components in the city’s plan to become an international financial center,” Xu Wenhu said. Two shipping insurance centers were set up in December, providing a boost to insurance services in the city. The number of insurance companies in Shanghai increased to 110 at the end of 2010 from 100 a year earlier.
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