CBIRC Publishes Framework Determining C-ROSS Reinsurance Risk Charges Applicable To HK Reinsurers

On 17 July 2018, the China Banking & Insurance Regulatory Commission (CBIRC) published its framework for determination of re-insurance risk charges applicable under C-ROSS to transactions between domestic insurance companies and Hong Kong insurance companies (Framework).

Key elements of the Framework are:

1. In transactions where a domestic China direct (primary) insurer (China Cedant) reinsures its risks with an 'Accredited Hong Kong Reinsurer', then the C-ROSS reinsurance risk charge RF0 applicable to such transaction (i.e. to the China Cedant's reinsurance recoverables) will be deemed to be 0.087 (zero point zero eight seven), meaning in effect that, for the purposes of C-ROSS, the Accredited HK Reinsurer, without being required to place collateral within China, will in fact be treated as though it were to a CBIRC-authorised foreign reinsurer which had placed collateral within China.