On August 14, People’s Insurance Company of China (PICC) and Dalian Commodity Exchange (DCE) held the signing ceremony for the strategic cooperation of “‘Insurance + Futures’ – Water of Financial Innovation Irrigating Tree of ‘San Nong (Agriculture, Rural Areas and Farmers)’ Development” in Dalian. At the ceremony, PICC and DCE signed a strategic cooperation agreement. PICC’ s Dalian Branch signed egg price insurance and corn price insurance contracts with Beijing Vica Group, Guiyong Corn Planting Specialized Cooperative, and Huamao Grain Planting Specialized Cooperative. PICC has also signed a business cooperation agreement with Xinhu Futures Co., Ltd., generating the first agricultural product price insurance policy with the use of futures in China.
According to the agreement, PICC and DCE will conduct in-depth cooperation in multiple areas, including price insurance, research into the “insurance+ futures” model, business hedging, new product development, staff training, etc., so as to realize each other’s complementary advantages.
Based on the price insurance policies signed at the ceremony, PICC’s Dalian Branch will provide price insurance for 300 tons of eggs for Vica Group as well as 1,000 tons of corn for YixianCounty’s Guiyong Corn Planting Specialized Cooperative and Huamao Grain Planting Specialized Cooperative based on the agreed futures price levels. From September 1, 2015 to August 31, 2016, when the relevant egg and corn prices are lower than the agreed futures price levels, the insurance company will make payments to compensate. In order to transfer the price risks of the insured products, PICC and Xinhu Futures signed the aforementioned agreement to cooperate on insurance products’ risk hedging.
Based on DCE President Mr. Feng Bo’s speech at the signing ceremony, DCE saw the market gap for agricultural product price insurance and the need for cooperation between futures, banks, and insurance sector, in order to better serve “San Nong”.
Representatives from Dalian Financial Bureau, Dalian Insurance Regulatory Bureau, Dalian Securities Regulatory Bureau, DCE, PICC, Xinhu Futures and relevant farmer groups attended the signing ceremony.
