China advances push for sectoral insurance pools

China is exploring the use of insurance pools to provide coverage in a range of cutting-edge technology fields, with the aim of improving risk-sharing mechanisms for technology finance and strengthening the risk protection system supporting the development of new quality productive forces.

An insurance pool is a collaborative mechanism comprising two or more insurance institutions that jointly underwrite risks and share liabilities to provide insurance coverage for specific sectors or major projects. When a single insurer finds it difficult to independently take on high-risk business, multiple insurers form an alliance and share the risks and premiums according to agreed proportions. The core purpose is to reduce the underwriting pressure on individual insurers through coordination among members of the insurance pool while improving service efficiency.

Cutting-edge technology sectors generally face challenges in risk assessment and accurate pricing. Jiang Han, a senior researcher at the Pangoal Institution, a public policy research institute, said frontier technologies typically involve high investment and high risks, while the capital of a single insurer may be insufficient to cover extreme losses. The insurance pool model can effectively address the difficulty of insurers being reluctant to underwrite cutting-edge technology projects by sharing risks among multiple institutions.

Emerging sectors also lack sufficient historical data, making it difficult for insurers to price risks accurately. Under the insurance pool model, multiple institutions can pool their resources and work with research institutes to jointly develop risk-control models, helping address pricing challenges. In addition, by bringing together multiple insurers, reinsurers and insurance brokers to jointly underwrite risks according to agreed proportions, the insurance pool model expands underwriting capacity.

In March, the Ministry of Science and Technology, the National Financial Regulatory Administration and two other government departments jointly issued guidelines on accelerating the high-quality development of technology insurance. The guidelines explicitly called for the establishment of specialized insurance pools in key technology sectors that are strategically important to the country, face potentially significant risks or lack sufficient risk diversification. The move is intended to significantly enhance risk protection capacity in critical areas.

Guided by policies, insurance pools covering commercial spaceflight, cybersecurity and quantum technology have been established in recent months, helping fill longstanding gaps in risk protection for emerging industries.

On July 15, a commercial space insurance pool was officially launched in Yangjiang, Guangdong province. As construction of the Yangjiang Commercial Space Industry Park accelerates, risks are becoming increasingly concentrated across areas including rocket and satellite development, land — and sea-based space launches, in-orbit operations, marine engineering and third-party liability. The projects also involve enormous insured values, making it difficult for a single insurer to assume the risks independently.

Beyond commercial spaceflight, insurance pools are also being established in other specialized sectors such as artificial intelligence, reshaping the risk-protection ecosystem for the technology industry.

Experts said that by leveraging collaboration among multiple institutions, the insurance industry can accumulate risk data from emerging industries, refine pricing models tailored to new types of risks, and reduce the cost of trial and error for technology companies. Financial sector coordination can thus help safeguard China's pursuit of high-level technological self-reliance and strength.

Looking ahead, Yang Fan, general manager of Beijing Paipaiwang Insurance Agency Co, said that as the country continues to promote technological innovation and the development of new quality productive forces, the insurance pool model is expected to expand into more emerging industries and become increasingly specialized, standardized and digitalized.

jiangxueqing@chinadaily.com.cn