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China encourages mainland insurers to sell catastrophe bonds in Hong Kong

China encourages mainland insurers to sell catastrophe bonds in Hong Kong

FILE PHOTO: Surveillance cameras are seen outside the China Banking and Insurance Regulatory Commission (CBIRC) building in Beijing, China December 13, 2018. Picture taken December 13, 2018. REUTERS/Stringer

BEIJING : China's banking and insurance regulator released a notice on Monday encouraging the sales of catastrophe bonds by mainland insurers in Hong Kong.

Mainland property and casualty insurance companies and reinsurance companies can set up special-purpose entities in Hong Kong to raise funds from bond sales, according to a statement of the China Banking and Insurance Regulatory Commission (CBIRC).

The arrangement can help diversify insurers' losses from natural disasters such as earthquakes, floods and typhoons, it said.

Devastating summer floods in the populous province of Henan in central China this year sent a wake-up call for Chinese authorities to seek better insurance cover against natural disasters.

The CBIRC said in July that it would guide insurers to increase investment in natural disasters insurances, enrich product offerings, as well as raise public awareness of risks to let natural disaster insurance play a greater role in national emergency response.

(Reporting by Cheng Leng and Ryan Woo; Editing by Tom Hogue, Kirsten Donovan)

Source: Reuters

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