China has announced a major shake-up of its fisheries insurance sector.
According to a joint statement from the Agriculture Ministry and the China Banking and Insurance Regulatory Commission (CBIRC), a new commercial operation will be set up by the China Fisheries Mutual Insurance Association (CFMIA), which will then cease offering insurance itself.
Policies offered by the new insurer, which will be set up by the end of the year, will include fish stock, liability, and accident insurance, as well as reinsurance. The new insurance company will be regulated by the CBIRC and comes after several years of research by the CBIRC. Regional branches of the CFMIA will now focus on “professionalizing” insurance personnel and policies, according to the statement, issued after the closing of the National People’s Congress in Beijing.
China's valuable insurance sector remains largely in the hands of state-owned firms. The People’s Insurance Company (PICC) and China Pacific as well as China Life all offer cover for distant-water fishery companies. This has been seen as low-risk given the Chinese fleet has been extensively modernized.
However, Chinese insurance companies have traditionally been reluctant to the cover agriculture and fisheries sectors, due to their inability to acquire independently verifiable sources of data, partially as a result of the single party state controlling all of the country’s data flows. That has limited their ability to price risk. Additionally, high-profile loss of stocks – such as a wipeout of scallop stocks at Zoneco – has frightened some insurers off the sector.
In recent years, numerous government-guided pilot trials have been run for aquaculture, and through recent knowledge transfer from international peers, some firms have been able launch products for terrestrial livestock.
But the situation in regard to aquaculture has changed in recently due to the increased involvement of large feed firms in the sector, which are backed by financing entities and financial institutions. Those financers, in turn, require insurance for loan issuance. The state-funded CFMIA has been encouraging commercial insurance companies to also provide reinsurance for fishery insurance mutual insurers, with state-owned insurance providers PICC, China Pacific Insurance Company (CPIC), China Continent Insurance, and Ping An Insurance (Group) Company of China among those pushing for the change.
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