The China Banking and Insurance Regulatory Commission (CBIRC) has again extended the preferential treatment afforded to Hong Kong under the China Risk Oriented Solvency System for another year, lasting until June 30, 2021.
The arrangement, which was initiated in 2018, allows insurers from the mainland that cede business to qualified Hong Kong-based reinsurers to enjoy lower capital requirements. In 2019, it was extended for the first time.
Prior to that, in May 2017, the Equivalence Assessment Framework Agreement on Solvency Regulatory Regime was signed by the former China Insurance Regulatory Commission and the former Office of the Commissioner of Insurance.
According to the CBIRC, that continuation of the preferential treatment will help strengthen mutual trust in insurance supervision and increase market efficiency and enhance supervisory effectiveness. These, the regulator said, are conducive to global diversification of insurance risks in mainland China and promote joint development of the insurance market with Hong Kong.
Meanwhile, Hong Kong’s Insurance Authority said that the arrangement strengthens the collaborative relationship between the Hong Kong and mainland insurance sectors. It also allows Hong Kong to actively participate in both the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area development, reinforcing Hong Kong’s role as an international financial centre.
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