China Agricultural Insurance Reinsurance Pool Established in Beijing
On November 21, the founding conference of the China Agricultural Insurance Reinsurance Pool (hereinafter referred to as the “Agricultural Pool”) was held in Beijing. Representatives from the China Insurance Regulatory Commission, the Office of the Central Rural Work Leading Group, the Ministry of Finance, the Ministry of Agriculture, and the State Forestry Administration, along with some experts and scholars, attended the meeting.
The Agricultural Pool was jointly initiated and established by 23 insurance companies with agricultural insurance operating qualifications, including PICC Property and Casualty Company Limited, and China Property & Casualty Reinsurance Company Ltd. Grounded in China's national conditions and drawing on international experience, the Agricultural Pool fully integrates domestic insurance industry resources through institutional arrangements and market-based models, enhances the overall risk management level of agricultural insurance, and provides sustained and stable reinsurance protection for agricultural insurance.
Under the impact of global warming, the probability of extreme climate events is continuously increasing, and regional and river-basin risks are gradually being exposed. The severe floods in Heilongjiang in 2013, the severe drought in Liaoning in 2014, and the two typhoons in Hainan all resulted in huge excess claims in the relevant provinces. Looking at the international market, the 2011 floods in Thailand and the severe drought in the United States in 2012 both produced record-breaking payouts, bringing considerable impact on the sound operation of the insurance systems of the countries concerned.
At present, China is in a new period of advancing agricultural modernization. Agricultural production is gradually shifting toward appropriately scaled operations, with larger scale of investment and higher risks faced, and the demand for risk protection from agricultural insurance will inevitably become stronger. However, the incomplete catastrophic risk diversification mechanism has affected the soundness of the operation of the agricultural insurance system, restricted the improvement of the level of insurance and the further expansion of coverage, and become a bottleneck issue that urgently needs to be resolved in the next stage of agricultural insurance development. The Party Central Committee and the State Council attach great importance to the catastrophic risk diversification mechanism for agricultural insurance. For 7 consecutive years from 2007 to 2013, the central “No. 1 Documents” all set requirements for this work. Relevant departments have also issued the Measures for the Administration of Catastrophic Risk Reserve Funds for Agricultural Insurance and, through window guidance and various other means, actively promoted the related work.
A responsible official of the relevant department of the China Insurance Regulatory Commission pointed out in a speech that the establishment of the Agricultural Pool is a concrete embodiment of implementing the guiding spirit of the Party Central Committee and the State Council, an institutional innovation carried out to support the sound development of agricultural insurance, and marks that China's agricultural insurance development has entered a new stage. China's agricultural insurance is still in the primary stage of development, and problems remain, such as limited protection levels, insufficient service capacity, and an incomplete catastrophic risk diversification mechanism, which need to be resolved through hard work. Member companies of the Agricultural Pool must have a sense of responsibility, a long-term perspective, and a sense of the overall situation; they must dare to shoulder responsibilities, fully reflect the original intent of national policy design, and ensure that national preferential policies are implemented to the letter in the hands of farmers. It is necessary to continuously improve the operating mechanism, strengthen the accumulation and research of risk data, enhance the level of operation and management, effectively strengthen the ability of agricultural insurance to respond to catastrophic risks, overcome the impact of the short-term and volatile nature of external markets on the sustained and stable development of China's agricultural insurance, and ensure the stability of risk diversification channels for agricultural insurance after major disasters.
At the meeting, the 24 initiating companies of the Agricultural Pool jointly signed the Articles of Association of the China Agricultural Insurance Reinsurance Pool, reviewed and approved the relevant rules and regulations of the Agricultural Pool, and elected PICC Property and Casualty Company Limited as the first rotating chairman of the General Meeting of Members of the Agricultural Pool, and specified China Property & Casualty Reinsurance Company Ltd. as the management institution of the Agricultural Pool.