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China encourages mainland insurers to sell catastrophe bonds in Hong Kong By Reuters

by Mike Robinson

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© Reuters. FILE PHOTO – Surveillance cameras can be seen outside China Banking and Insurance Regulatory Commission building, Beijing (China), December 13, 2018. Picture taken December 13, 2018. REUTERS/Stringer

BEIJING (Reuters) – China’s banking and insurance regulator released a notice on Monday encouraging the sales of catastrophe bonds by mainland insurers in Hong Kong.

The China Banking and Insurance Regulatory Commission(CBIRC) stated that reinsurance and property insurance companies from mainland China can establish special-purpose entities to help raise money through bond sales.

According to the CBIRC, this arrangement will diversify insurers losses in natural catastrophes like floods, earthquakes, and Typhoons.

China was forced to take better measures against natural catastrophes after the devastating floods this summer in Henan, a populous central Chinese province.

In July, the CBIRC stated that it would help insurers increase their investment in natural catastrophes insurances. It also enriched product options and raised public awareness about risks so natural disaster insurance can play an increased role in emergency response.

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