Accelerate insurance product service innovation to guide long-term capital into the technology sector

Securities Times Reporter Qin Yanling

On March 2nd, the Ministry of Science and Technology, the China Banking and Insurance Regulatory Commission, the Ministry of Industry and Information Technology, and the National Intellectual Property Administration jointly issued the “Opinions on Accelerating the High-Quality Development of Science and Technology Insurance to Strongly Support High-Level Scientific and Technological Self-Reliance and Self-Strengthening” (hereinafter referred to as the “Opinions”). The document proposes 20 policy measures around “who to protect, what to insure, and how to insure,” aiming to accelerate the development of a science and technology insurance system compatible with technological innovation.

Science and technology insurance is a vital part of the broader science and technology finance sector, playing an important role in dispersing innovation risks and supporting funding. The “Opinions” call for strengthening insurance coverage for major national scientific and technological tasks, tech-based small and medium-sized enterprises, key areas, and critical links of innovation. It also guides institutions to accelerate innovation in science and technology insurance products and services by promoting pilot reforms for long-term insurance fund investments and improving internal risk tolerance mechanisms for state-owned insurance institutions involved in venture capital, among other measures, to direct insurance funds toward the field of technological innovation.

The “Opinions” advocate establishing a comprehensive insurance product and service system covering the entire chain and lifecycle of technological innovation. This system should not only increase support for major national scientific and technological projects but also strengthen insurance coverage for tech-based SMEs.

Specifically, regarding major national scientific and technological tasks, the “Opinions” first propose establishing a national coordination mechanism for major technological breakthroughs in science and technology insurance; developing multi-entity risk dispersal models, improving multi-layer loss-sharing approaches, and establishing professional insurance consortia in key technological fields to enhance risk mitigation mechanisms for major technological breakthroughs.

Currently, industry-wide co-insurance groups in key technological fields include the China Integrated Circuit Co-insurance Group and the Beijing Commercial Aerospace Insurance Co-insurance Group. Industry insiders have learned that in innovative fields lacking historical data, co-insurance groups are suitable for alleviating underwriting difficulties. Once established, they can further expand product offerings to meet different needs.

Regarding the risk characteristics of tech-based SMEs, the “Opinions” propose specific measures to promote convenient and accessible science and technology insurance products and expand coverage. It encourages regions with favorable conditions to reduce insurance costs by increasing premium subsidies, supports local efforts to tailor flexible insurance schemes based on the risk profiles of tech SMEs and scenarios like “use first, pay later” for technological achievements.

Zhang Daoming, temporary head of PICC Property and Casualty, told Securities Times that currently, the industry faces challenges such as the need for extensive industry data to support precise product pricing, insufficient professional talent in complex science and technology insurance, and difficulties in channeling insurance costs for R&D projects. The “Opinions” aim to upgrade science and technology insurance from passive protection to active empowerment. For example, integrating data resources and promoting the improvement of cross-departmental data sharing mechanisms will help enhance risk pricing accuracy and accelerate product innovation.

Furthermore, the “Opinions” emphasize leveraging the long-term and patient capital characteristics of insurance funds, with two policy measures focusing on supporting major national science and technology projects and venture investments.

These include encouraging insurance funds to prioritize support for companies undertaking major national science and technology projects; promoting pilot reforms for long-term investment of insurance funds, encouraging priority investments in tech-based enterprises; increasing financial support for venture capital institutions focusing on frontier technology fields; and establishing a robust internal risk tolerance mechanism for state-owned insurance institutions involved in venture capital.

(Edited by: Qian Xiaorui)

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