CHINA EMERGES AS PEAK CATASTROPHE ZONE

CHINA’S crowning as the third peak zone for insurance and re­insurance catastrophe capital remains a decade away, despite the devastating losses of 2008. But according to the latest report analysing catastrophe losses for last year, this time produced by newly-merged brokerage Aon Benfield, the events of 2008 have clearly shown that China is emerging as another peak zone for catastrophe exposures. Currently, the peak insured risk exposed to natural catastrophes is the US East Coast, which itself has a peak exposure in Florida. The second-highest insured peak continues to be earthquake risk in the US, particularly in California. But Aon Benfield said the continued rapid growth of the market in China will see it become the insured natural perils peak of the world in the coming years. According to the reinsurance broker, this will bring benefits to other areas of major exposure. In time, China is expected to find its catastrophe risks become less diversifiable in the worldwide insurance and reinsurance market. Florida, California and Europe are in turn expected to benefit from lower relative catastrophe insurance and reinsurance costs as China’s insured catastrophe risks rise.