Three days ago, the "Promoting High-Quality Financial Development and Accelerating the Construction of a Strong Financial Country" case report meeting on high-quality financial development, hosted by People's Daily, was held in Beijing. China Pacific Insurance was successfully selected as a "2024 High-Quality Financial Development Case."

"2024 High-Quality Financial Development Case" is a selection conducted by People's Daily based on the achievements, business highlights, and distinctive characteristics of various financial institutions over the past year around the "Five Major Articles." The case submitted by China Pacific Insurance, "China Pacific Insurance's Innovative Carbon Emission Cost Price Index Insurance for the Shipping Industry Aiding the Industry in Facing the Challenges of Green Transformation," excelled in typicity, innovation, and advancement, ranking high in comprehensive scoring and standing out.

Climate change is a common problem faced by countries around the world, and all countries and industries should strive to achieve net-zero emission goals. The shipping industry, as a pillar of global trade, accounts for approximately 3% of global greenhouse gas emissions, making emission reduction significant. The International Maritime Organization (IMO) plans to reduce the total carbon emissions of the shipping industry by at least 50% compared to 2008 by 2050. Since IMO's emission reduction regulations have not yet been introduced, the European Union will include the shipping industry in the EU Carbon Trading System starting in 2024, requiring carbon emission obligors involved in European navigation to bear emission costs according to rules, but this leads to a mismatch between costs incurred in the current period and those determined for the future, causing operational uncertainties for the shipping industry.

To support the proactive response of China's shipping industry to the decarbonization risks, China Pacific Insurance has pioneered shipping decarbonization insurance (i.e., shipping carbon emission cost price index insurance). This product is the first innovative financial product in China's financial industry designed to help foreign trade address the shipping decarbonization risks under international climate change, focusing on the key issue of mismatch between current and future costs of carbon emissions from international sailing ships. By providing insurance, it smooths out the operational uncertainties brought about by cost fluctuations over periods, effectively alleviating the risks brought about by the inclusion of China's shipping industry in the EU carbon market management and providing robust support to enterprises affected by related EU policies, further enhancing the industry's ability to respond to international climate change risks.

The EU carbon emission cost price index insurance for the shipping industry is currently China's first and only financial product that helps the shipping industry solve the cost mismatch risk brought about by inclusion in the EU ETS, providing a solution for enhancing the decarbonization risk response capabilities of China's shipping industry. This product is designed and priced through a comprehensive actuarial pricing model, effectively helping shipping companies avoid risks arising from the rising prices of EU carbon quotas. It can achieve price locking across periods through combinations of short-term + short-term, long-term + short-term, etc., demonstrating strong feasibility and reliability. This product empowers the certainty of shipping operations, boosts their confidence in facing challenges brought by international climate change, and steadily promotes the decarbonization process of the fleet to achieve emission reduction targets.

Industry insiders indicate that shipping decarbonization insurance has considerable feasibility for replication and promotion in non-EU regions. The non-EU shipping industry is also included in the EU ETS and similarly faces cost mismatch risks while lacking countermeasures. Through the standardized output or replication of this product, it can provide services for shipping-related enterprises in non-EU regions, offering them innovative Chinese practice cases.

Under the guidance of the national "dual carbon" goals, China Pacific Insurance has made green insurance a special strategy for systematic exploration. As the first insurance company in the domestic property insurance industry to clearly propose a sustainable insurance strategic plan and systematically carry out innovative practices, China Pacific Insurance has officially joined the United Nations Global Compact (UNGC) and signed China's "Belt and Road Initiative Concept" Green Investment Principles (GIP), leading the development of green insurance in the industry through systematic design, forward-looking research, and innovative practices.

The above case is a microcosm of China Pacific Insurance's efforts to write the "Five Major Articles" of finance. China Pacific Insurance will further leverage its professional advantages, continuously deepen and innovate around key areas, and make every effort to serve as the main force in supporting the real economy, safeguarding people's quality of life, and continuing to contribute "Pacific Power" to assist in the construction of a strong financial country and accelerate the advancement of Chinese-style modernization.