China seeks $15 billion fund to rival Western ship insurance

Chinese hub would cover catastrophic sea losses by 2029

Chinese maritime officials are in talks with local shipping companies, banks and Chinese insurers about assembling about $15 billion in funds to establish an insurance and reinsurance hub for catastrophic events at sea, such as a ship sinking or mariners lost, according to people familiar with the discussions.

The people said the objective is to create a Chinese maritime-insurance system by 2029. The same people cautioned that the discussions are at an early stage and could collapse, given the size of the sum that would have to be raised and other challenges. The report was written by The Wall Street Journal’s Costas Paris.

The effort targets a role long held by Western financial institutions, including Lloyd’s of London. If it succeeded, Beijing’s push would shake up a centuries-old arrangement that has undergirded global shipping.

The appeal for China is partly defensive. A domestic maritime-insurance system would advance the country’s efforts to insulate itself from sanctions and from events that could choke the international shipping so vital to its export-driven economy.

For Western shippers the calculus is commercial: the Journal reported they could move business to the Chinese hub if it offered more attractive terms.

Marine insurance coverage for catastrophic events at sea, such as a ship sinking or mariners lost, has been provided by Western financial institutions such as Lloyd’s of London, part of a centuries-old setup that has undergirded global shipping, the Journal reported.

For China, whose export-driven economy depends on that international shipping, a homegrown reinsurance capacity would establish the alternative to the shipping insurance provided by Western financial institutions that the country is moving to build.

Roughly $15 billion would be raised from shipping companies, banks and insurers to capitalize the hub, a sum the people familiar with the discussions said is one reason the effort could still fall apart.

The people said the timeline is only a goal: the talks remain at an early stage and the participants could still walk away.

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Architect Patrick Shay said: “I haven’t talked to a single architect who doesn’t want to use it.”

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