Domestic News  /  China's carbon goals open doors for insurers

China's carbon goals open doors for insurers

  • Date: 2021-08-10
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China started trials of this insurance in 2008 to test the role of market actors and mechanisms in mitigating environmental pollution. Ping An was one of the first companies to offer such services. But the company said that it's during the past five years that the demand skyrocketed. 

Several green finance pilot zones were set up in eastern Jiangxi and Zhejiang provinces in 2015 as the amendment to China's Environmental Protection Law took effect. Ping An is presently working with Tsinghua University and Soochow University to set up a risk management platform for the green insurers. 

Another insurer, China Pacific Property Insurance, offered products for projects in hydroelectric and photovoltaic power as early as the late 1990s. The company was covering more than 150 hydroelectric power projects during the first half of this year, with policy values of more than 50 billion yuan (about $7.7 billion). Its green insurance coverage for photovoltaic power projects was almost 100 billion yuan in the same period. 

"Our catastrophic loss coverage has few individual buyers, with most being company owners or the government. We're working to expand our coverage to individual purchasers," said Tao Lei, assistant general manager and board secretary at China Pacific Property Insurance. Tao said his company is taking new energy vehicles as the primary way to focus more on individuals in the green consumption network. 

During the first six months of the year, China Pacific Property Insurance sold commercial auto insurance coverage of more than half a trillion yuan to 400,000 new energy vehicle owners. 

China's newly opened carbon trading market has further boosted the demand for green insurance. Last year, almost 2 trillion yuan in green insurance coverage was purchased for clean energy projects, posting an annual growth rate of 20 percent. Experts say there's still plenty of room for growth.

The Insurance Association of China, an industry body, released a green development report in June, which suggests further diversification of insurance products and steps to cut risks in sectors like clean energy, new energy vehicles, low-carbon technology and natural disaster prevention. 

The report said that life insurance accounted for 70 percent of the total insurance funds. This means that the industry is well-positioned to participate in environmental protection causes that usually need long-term investment. 

Investment in the Environmental-Social-Governance (ESG) business can in return enable insurance companies to better design and price and manage the green insurance risks, said Jimi Zhou, financial service consulting partner of PwC China. 

Zhou also pointed out that green insurance products should protect against a variety of risks, including environmental pollution, impact of climate change and poor handling of carbon trades. This, he said, will require more guidance from the government to help insurance companies better understand how their products should develop.


Source:CGTN

Author:CGTN

Date:August 10, 2021