NAT CAT INSURANCE SYSTEM PONDERED IN CHINA

China is considering the establishment of a natural catastrophe insurance system, according to Li Liguo, vice-minister of civil affairs. He said that lessons needed to be learnt from the losses suffered in the Tangshan earthquake in 1976, which killed a quarter of a million people and caused 10bn yuan in direct economic losses. If a similar earthquake struck today, computer models suggest that economic losses could be as high as 600bn yuan. Guo Zuojian of the China Insurance Regulatory Commission told Xinhua that China needed to rush through earthquake insurance legislation, since none were currently in place. He noted that natural catastrophe risks in China could not yet be borne by commercial insurers alone. A recent official report recommended the establishment of a disaster risk insurance system. Edouard Schmid of Swiss Re told Xinhua that “by sharing the natural catastrophe risk between policyholders, the domestic insurance industry, the global reinsurance industry, capital markets and the State, even very extreme catastrophe losses become insurable”.