context: Linking agricultural insurance products with futures markets was first included in the 2016 no 1 document and by the 2017 no 1 document, pilots were well underway. Extending insurance to farmers and subsidising their premiums is a WTO compliant alternative to direct subsidies, likely to increase in priority as trade tensions escalate.

To date, three insurance giants, People’s Insurance Company of China (PICC), China Pacific Insurance Company and Ping An Insurance have been approved to participate in ‘insurance + futures’ pilots aimed at supporting agricultural insurance products with hedging tools based on futures markets. Despite good prospects, practical operation of the model faces a number of challenges. Representatives from Ping An Property Insurance told Economic Daily that

  • insurance companies are struggling to build sustainable business models around ag insurance + futures due to immature market conditions and the high degree of uncertainty in the ag sector
  • current futures price-identifying mechanisms are unsound

Wei Bolin 魏柏林 PICC Poverty Alleviation division deputy general manager argues

  • a long-term subsidy plan is needed to provide clear incentives for insurance companies
  • better collaboration and information sharing between futures, insurance and banking industries is needed to improve services