The China Insurance Regulatory Commission has given the green light to the formation of the country’s first locally incorporated captive.
The captive’s joint parents will be the China National Petroleum Company and its subsidiary Petro China, with the entity due to be capitalised to the tune of $804 million. Restrictions on the provision of coverage for oil and gas companies are believe to be one of the motives behind the move, with the situation likely to encourage other large energy players to consider captive insurance.
Chinese firms are beginning to explore the potential of captive insurance and the move should be a major boost to the industry. However, analysts have indicated that a nascent captive sector will need clear and sophisticated regulation, alongside tax benefits and flexibility in capital utilisation in order for the market to really develop.
China, China Insurance Regulatory Commission, China Petroleum Company, Petro China, captive