Planning for Disaster

By Wang Jun

The unprecedented July rainstorm that swamped Zhengzhou， capital city of Henan Province， has highlighted the role of catastrophe insurance in compensating losses caused by serious natural disasters.

At a press conference， Ma Chao， deputy head of the Henan Office of the China Banking and Insurance Regulatory Commission （CBIRC）， announced that as of August 10， insurance companies in Henan had received 501，400 claims for losses caused by the rainstorm. Ma told attending media that 257，600 of these claims had already been settled， with a payout of 4.01 billion yuan（$621.71 million）.

Covering both life and property， catastrophe insurance provides targeted compensation and is conducive to expanding the proportion of losses covered by insurance. Since the Central Government proposed the establishment of a catastrophe insurance system in 2013， pilot projects have been carried out by various local governments to explore customized models.

The insurance industry has been playing an increasingly important role in the compensation of natural disasters， and the 14th Five-Year Plan （2021-25） requires developing catastrophe insurance as part of the work to improve national emergency response.

Several disasters covered

“Our house was destroyed by the earthquake and we had to stay with relatives，” Deng Wenxiu， a villager in Changning County， Sichuan Province， told Peoples Daily. When the county was hit by a 6-magnitude earthquake on June 17， 2019， Dengs house was covered by a pilot program for earthquake catastrophe insurance. Two months later， he received 20，000 yuan （$3，100） in compensation to rebuild his home.

According to the Peoples Daily report， the first earthquake catastrophe insurance policy in Sichuan was issued in 2015， and residential earthquake insurance now covers 19 of the 21 cities and prefectures in the province， with 57.26 million yuan （$8.88 million） having been paid in compensation.

China is one of the countries most seriously affected by natural disasters， and catastrophes such as earthquakes， typhoons and floods have caused huge losses throughout both ancient and modern history. “Earthquake insurance is the first catastrophe insurance in China， and its introduction marked a breakthrough in Chinas establishment of a catastrophe insurance system，” Tuo Guozhu， head of the Institute of Rural Insurance at Capital University of Economics and Business， said.

Tuo said worldwide catastrophe risks include floods， droughts， storms， and earthquakes as well as nuclear power plant accidents and reservoir bursts capable of causing serious losses. In China， catastrophe insurance has been expanded to cover typhoons and floods.