Guotai Haitong: Improving the Market Ecosystem for Shipping Insurance Products, Leading Insurers' Advantages Stand Out

Guotai Haitong released a research report stating that the National Financial Regulatory Administration and six other departments issued the "Guiding Opinions on Accelerating the High-Quality Development of Shipping Insurance," aimed at improving the shipping insurance ecosystem, optimizing product supply, and enhancing protection levels, maintaining an "Overweight" rating. It is expected that leading property and casualty insurers will continue to outperform the industry in underwriting profitability under the operational guidance of improving quality and efficiency. Guotai Haitong's main views are as follows: Event: On November 6, the National Financial Regulatory Administration and six other departments issued the "Guiding Opinions on Accelerating the High-Quality Development of Shipping Insurance" (hereinafter referred to as the "Opinions"), proposing to build a modern shipping insurance system that is independent and controllable, strongly protective, efficiently serviced, and orderly in competition, comprehensively enhancing the independent protection capacity and global service level of shipping insurance, and comprehensively raising the insurance protection level for domestic vessels and domestic cargo. The policy positioning of shipping insurance has been significantly elevated, upgrading from past fragmented regulatory documents to an industry support framework coordinated by multiple ministries. In the past, the development of shipping insurance was constrained by insufficient underwriting capacity, absence of supply for emerging risks, and weak willingness to insure vessel and cargo insurance. This joint document by seven departments connects a series of ecosystem links including products, pricing, claims, and regulation, providing systematic policy support for shipping insurance to expand underwriting volume, broaden emerging protection scenarios, and improve the domestic risk diversification system. The "Opinions" focus on expanding protection capacity and building a market ecosystem. (1) Expand protection supply and improve risk diversification mechanisms. Fully utilize vessel survey and assessment mechanisms to promote sound full-lifecycle insurance management solutions for high-value vessels and marine engineering equipment, and encourage commercial co-insurance and other forms to enhance large-risk underwriting capacity. (2) Improve clauses and rates and enhance independent pricing capability. Support the Insurance Association of China and the Shanghai Shipping Insurance Association in uniformly formulating and publishing standard clauses aligned with international markets, with the Actuarial Association of China supporting the formulation of pure risk loss rates for shipping insurance; build a shipping insurance data-sharing platform, utilize credit evaluation results in the maritime regulatory field, and introduce artificial intelligence to assist pricing. (3) Improve claims services and strengthen risk reduction. Implement rapid claims settlement for small cases and establish a coordination mechanism for major shipping insurance cases; support the China Classification Society in developing vessel technical standards for risk reduction, with insurers offering differentiated rates to vessels and cargo that adopt effective risk reduction measures; build a "whitelist" for China's overseas services and an overseas service network. (4) Optimize product management and regulate market order. Encourage insurers to file both Chinese and English clauses for shipping insurance products involving international trade and international navigation; require brokerage institutions to use filed clauses and rates and prohibit them from using filed "exclusive products" to indirectly modify clauses and rates. (5) Optimize business operation mechanisms. Require insurers to shift away from scale-oriented assessment, strengthen efficiency and risk control indicators, rectify irrational competition, and provide supporting support in talent staffing, entry-exit facilitation, and other aspects. It is expected that the "Opinions" will promote the enhancement of shipping insurance underwriting capacity and internationalization level, benefiting leading insurers with well-developed product and risk control systems and leading global service network layouts. The bank believes that the document is expected to drive shipping insurance in the medium to long term to shift from simple price competition to competition in risk control capabilities, global claims networks, and R&D capabilities for new risk products. Leading insurers and reinsurers with mature maritime underwriting teams and deep cooperation with shipowners/foreign trade enterprises will see their advantages stand out. Risk warnings: Policy progress falling short of expectations; decline in long-end interest rates; volatility in the equity market.