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China Green Finance Task Force Report: Green Insurance

Country Paper

Authors: Green Finance Task Force   

Published By: UNEP Inquiry    Research Bureau of the People's Bank of China   

Date: Apr 2015

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China Green Finance Task Force Report: Green Insurance

The rapid and continuous increase of environmental incidents in China in recent years has led to severe impacts on its sustainable social and economic development and public health. This paper sets out the case for green insurance as a market-based risk management mechanism which could play a proactive role in preventing and transferring environmental pollution risks and offering loss compensation. Compulsory requirements for the purchase of pollution liability insurance would make future pollution costs explicit at the outset for high-risk projects. The paper recommends that China:

  •  Develop a national compulsory green insurance system and promulgate Regulations on the Compulsory Pollution Liability Insurance. Co
  • Establish and improve relevant laws and regulations and enhance enforcement to build the rule of law as the basis of green insurance.
  • Establish a professional risk evaluation mechanism and loss identification standards
  • Create a corporate environmental credit rating database on the basis of a corporate environmental credit evaluation, so as to provide justification for determining premium rates and fiscal policy preferences for insured enterprises.
  • Create a mechanism for coordination between green insurance and other financial services such as green credit.
[NB: This paper is one chapter of the broader report “Establishing China’s Green Financial System” developed by the China Green Finance Task Force, which was convened by the Research Bureau of the People’s Bank of China together with the UNEP Inquiry]
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