Monday, February 21, 2011

China’s insurance regulator urges insurers to take active role in drought relief via AM Best: The China Insurance Regulatory Commission has urged insurers to be well-prepared for agricultural insurance underwriting in 2011, ensuring they are providing sufficient coverage for domestic cultivation throughout the year to facilitate steady protection of food and rural manufacturing against drought.

The drought problem in China has come early this year and caused continuous problems for economic activities concentrated in drought-affected regions. "Underwriting must be taken actively for crops that meet the conditions for insurance in order to ensure adequate insurance coverage for the spring production," said the CIRC in a statement.

The CIRC has requested all insurance regulatory bureaus and property insurers in affected regions to set up task forces and strengthen communications among different level governments to draft action plans and provide relief against the financial impact. These regions need to submit their action plans to the CIRC on Feb. 17, said CIRC. Provinces including Hebei, Henan, Shandong, Anhui, Jiangsu, Shanxi, Shaanxi and Gansu are seriously affected by the droughts.

The commission also urged regional insurance regulatory bureaus and insurers to collect insurance-related drought data. "Insurers are required to process agricultural insurance claims rapidly and pay the compensation in full within 10 days of assessing the crop losses caused by the droughts," noted the CIRC.

Insurance experts warn that with climate change unfolding, catastrophic events such as hurricanes, floods and droughts are likely to increase further, hitting in particular emerging markets and development countries. "The economic costs of natural catastrophes have risen from an average US$25 billion per annum in the 1980s to US$130 billion in the 2000s," said reinsurer Swiss Re in a recent report….

Rice farming in Yunnan, shot by Guy Lebègue, Wikimedia Commons via Flickr, under the Creative Commons Attribution-Share Alike 2.0 Generic license

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