Core Insights - The Financial Regulatory Bureau has issued a notification supporting domestic insurance companies to issue "sidecar" insurance-linked securities in the Hong Kong market, aimed at transferring catastrophe risks to the capital market [2][3] Risk Management and Catastrophe Insurance - "Sidecar" insurance-linked securities are a method for insurance companies to transfer risks associated with catastrophe events like earthquakes and floods to the capital market [3][5] - Catastrophe risks are characterized by low frequency but high loss potential, necessitating innovative financial tools for risk management [4][9] - The Chinese catastrophe risk landscape is complex, with over 70% of cities and more than 50% of the population located in areas prone to natural disasters [4] Market Context and Trends - In 2024, global natural disasters caused approximately $320 billion in economic losses, marking the third-highest figure since 1980, driven primarily by extreme weather events [6] - The establishment of catastrophe insurance systems in China has progressed, with various regions developing local catastrophe insurance frameworks tailored to specific risks [6][7] Financial Instruments and Innovations - Insurance-linked securities, including "sidecar" securities and catastrophe bonds, are innovative financial instruments that allow insurance companies to manage and transfer risks effectively [9][10] - The issuance of catastrophe bonds has been growing, with a projected market size of approximately $60 billion by 2025, indicating a significant opportunity for investment [11] Conclusion - The introduction of "sidecar" insurance-linked securities represents a strategic move to enhance the resilience of the insurance industry against catastrophe risks, providing a new avenue for risk diversification and capital acquisition [2][9]
巨灾风险如何不“爆表”？保险公司“侧挂车”？