According to a February 7 announcement on the CIRC website, COSCO Shipping Property Insurance Captive Co., Ltd. ("COSCO Shipping Captive") was approved to commence operations on January 25, becoming China's seventh captive insurance company — only 52 days after the company received approval to prepare for establishment last December.
Public information shows that COSCO Shipping Captive is a second-tier group subsidiary wholly funded and established by China COSCO Shipping Corporation Limited. It is registered in Shanghai with registered capital of RMB 2 billion. Wang Daxiong serves as legal representative and chairman, and Zheng Xiaozhe as general manager.
According to the company's official website, its strategic positioning is to serve as the group's risk management tool, group insurance management platform, and group risk cost center. Its business scope covers the risks borne by member enterprises of China COSCO Shipping Corporation Limited, including risks of loss and risks of liability for compensation. Lines of business include hull insurance, cargo insurance, liability insurance, commercial property insurance, engineering insurance, household property insurance, motor insurance, short-term accident/health insurance, credit insurance, and surety insurance.
Captive insurance is one of the important ways for enterprise managers to manage unpredictable risks. Its main purpose is to provide risk protection and risk solutions for shareholders and affiliated enterprises, with the ultimate goal of preventing and defusing risks, improving economic efficiency, and ensuring stable and healthy operations.
Public data show that the number of captive insurers worldwide has grown steadily. By the end of 2016, there were 6,531 captive insurers globally, of which about 50% were based in the United States. China's captive insurance sector entered its corporatized development stage in 2012. To date, including COSCO Shipping Captive, China has seven captive insurers: Hong Kong-based CNOOC Insurance Limited, Lenovo's captive insurer, Hong Kong-based Sinopec Insurance Limited, CNPC Captive Insurance Co., Ltd., Hong Kong-based CGN Insurance Limited, and China Railway Property Insurance Captive Co., Ltd. In addition, Guangdong Yuedian Property Insurance Captive Co., Ltd. was approved to prepare for establishment at the end of 2016.
At the inauguration ceremony of the Captive Insurance Committee of the Insurance Institute of China on January 7 this year, Zhou Yanli, former vice chairman of the CIRC, said that vigorously developing captive insurance helps steer China's insurance industry back to its core protection function and supports enterprises in strengthening risk management and expanding the liability insurance market. By developing captive insurance, enterprises can enjoy tax incentives, lower insurance costs, cover special risks, avoid the impact of commercial insurance market cycles, and achieve profit-center management, ultimately improving operational efficiency.
Since its official establishment in February last year, China COSCO Shipping Group has put forward a "6+1" industrial cluster strategy and identified shipping finance as one of its pillar businesses. After its establishment, COSCO Shipping Captive will serve as the group's internal insurance institution, undertaking internal operational risk control and insurance underwriting functions in response to the insurance needs of the group and its member units, helping the group reduce risk control costs and innovate risk response measures. At the same time, as a wholly state-owned insurance institution under China COSCO Shipping Group, COSCO Shipping Captive will also undertake special risk control functions for the group's overseas strategy, which is of great significance for the group's diversified operations and accelerated global strategic layout.
Source: 21st Century Business Herald, 2017-02-08