Under the Equivalence Assessment Framework Agreement on Solvency Regulatory Regime between the Insurance Authority ("IA") and the China Banking and Insurance Regulatory Commission ("CBIRC"), a Mainland insurer ceding business to a qualified Hong Kong professional reinsurer can enjoy a lower reinsurance credit risk charge under C-ROSS than an overseas reinsurer. Please click here for the Press Release.
First agreed on 17 July 2018 by the CBIRC, the preferential treatment under the C-ROSS has since been extended until 30 June 2021. Please click here for the Press Release. In the latest Mainland and Hong Kong Closer Economic Partnership Arrangement ("CEPA") which has taken effect from 1 June 2020, the Mainland Government has committed:
"On the basis of regulatory equivalence, to apply more relaxed requirements of credit risk for Mainland insurance companies ceding reinsurance businesses to qualified Hong Kong insurers and continue to consider taking forward other preferential policies under equivalence".1
This helps Hong Kong to participate and assist in the risk management of China's outbound investments, as part of the Belt and Road Initiative ("BRI").