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18th of May 2012

Chinese consider motor 3rd-party for foreign insurers

Vicky Beckett 08/11/2011

 
Chinese regulators are considering allowing foreign insurers to sell compulsory motor third-party liability insurance.
 
This may allow a company to write the risk into its captive rather than using fronting insurers.
 
Due to existing Chinese legislation foreign auto insurers have no access to this market, however, the China Insurance Regulatory Commission has submitted the proposal to the State Council.
 
If the proposal was passed into law it is expected that there will be a high entry threshold, including a minimum 30-year insurance business history and two-year representative office already established in mainland China, with total assets of US$5 bn and more.
 
Mike Squibbs, EMEA risk manager for the logistics company UPS, currently buys local cover for third-party motor liabilities in China.
 
Squibbs said: “We would definitely look at if the captive is a way we could cover third-party motor liabilities and look at what the financial considerations are. Could we manage it ourselves or would there be service providers we could use?”
 
Patrick Smith, Hertz international director of risk and claims management, said in the last three years Hertz has formed a car rental and an equipment rental business in China.
 
He said: “Our Chinese businesses have to use locally licensed insurers, so retention strategies are challenging.”
 
However, Lynn Yang, Partner of Norton Rose, Asia, based in Shanghai, believes that given that China's insurance market is still in the infant stage, potential impact of this proposal on captives is likely but not immediate.
 
The motor insurance industry in China currently accounts for 70% of the total non-life insurance premiums.

Tags: Captive, China, Foreign, Fronting, Insurance, Liability, Market, Motor, Regulators, Third party

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Hippie 09/12/2011 6:17pm

For the love of God, keep wriintg these articles.

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