Protecting Asia with insurance

Iris Lai in Insurance News.net: With scientists projecting increased intensity and frequency of severe weather in Asia, questions abound regarding sustainability of risk prevention and protection in the region. Several regions in Asia were hit by widespread natural disasters this summer. A flood in Pakistan destroyed 1.25 million homes and more than 6.9 million hectares of crop lands and is estimated to bring economic losses of US$20 billion, according to Aon Benfield. At least 1,667 people were killed and an additional 2,605 were injured.

Monsoon rains in August also damaged at least 3,000 homes in Indonesia and 10,000 homes in India's Kashmir. And in China, heavy rains in July and August caused flash floods and landslides in various provinces including Gansu, Sichuan, Shaanxi and Yunnan. This led to 829 deaths, and damages to 800,000 homes and more than four million hectares of crop lands. Total economic losses were estimated at US$16.02 billion. The massive floods and mud-rock flows triggered by torrential rains in Zhouqu county of Gansu province killed at least 1,467 people and injured another 2,000, with 298 missing.

Every year in China, an estimated 200 million people are affected by natural catastrophes, said Peter Hoeppe, head of geo risk research at Munich Re. However, natural catastrophe coverage is not widespread in the individual, company and municipality levels--despite China's quickly growing insurance market. At the same time, Hoeppe said, economic values, especially in big cities, are rising rapidly.

"China's risk landscape will become more complex as economic prosperity grows," said Hoeppe, citing the increased demand for natural catastrophe insurance. Measures for risk prevention and transfer are necessary in China to reduce the burden on government. "It might also make economic sense for the state and municipalities as the biggest owners of property to transfer their risk to the worldwide insurance sector," he said….