"It`s very difficult to develop international trade without insurance. You have to insure the ship before it hits the water and navigates, and international cargo should be insured, too, before leaving," Pei Guang, head of the Shanghai bureau of the China Insurance Regulatory Commission, told a forum on Sunday.
Pei said that although China`s international trade has grown rapidly in recent years, its insurance sector has lagged and doesn`t meet the needs of the world`s second-largest economy.
By contrast, the revenue of Japan`s trade-related insurance sector accounts for 10 percent of the world`s total, although the nation generates only 5 percent of global trade. Japan has been able to attract other countries to sign shipping insurance agreements there via its complete insurance services.
"We`re pushing the development of shipping insurance by inviting more companies to set up centers in Shanghai. We are also pursuing the formation of a shipping insurance association," Pei said. The goal is for the nation`s shipping insurance to be accepted globally.
"Our efforts will eventually pay off, as the shipping insurance association will officially launch by the end of the year," Pei added.
Building on the initiatives of the shipping insurance operation centers of the People`s Insurance Co (Group) of China, China Pacific Insurance (Group) Co Ltd and Ping An Insurance (Group) Co, the CIRC`s Shanghai bureau started preparatory work for the association in January.
"The association will attract more domestic insurance companies and international players to expand their footprint in Shanghai," said Gan Aiping, a professor at Shanghai Maritime University
"The association will be able to serve as a platform for members to share business and academic views, protect their interests and make their voices heard," Gan said.
Zhou Dequan, deputy director of the shipping market research department of the Shanghai International Shipping Institute, said the creation of a shipping insurance association is in line with the spirit of the Third Plenary Session of the 18th Central Committee of the Communist Party of China, which decided to let market forces play a decisive role.
"The association will shoulder some of the government`s responsibilities, such as coordination among companies and industrial internal management," said Zhou.
Advanced shipping services, which include shipping insurance, require a free market environment. The China (Shanghai) Pilot Free Trade Zone will offer a place to try out these concepts, said Zhou.
Pei said that a dozen shipping insurance centers have been set up in Shanghai recently, and they`re considering opening facilities in the FTZ.
"That will be a great driver for the development of shipping insurance, and it will be good for Shanghai in terms of building an international shipping center," said Pei.
Although Shanghai accounts for the lion`s share of domestic shipping insurance, it handles scant international business.