Publication: Catastrophe Insurance Policy for China
Loading...
Published
2010-12
ISSN
Date
2012-08-13
Author(s)
Editor(s)
Abstract
The vast majority of China's population lies to the southeast of a line running from Beijing to Sichuan. This entire region is subjected to major floods each year, while typhoons affect the southern and eastern coastal areas and major earthquakes affect the western and northern margins. The average annual direct property damage is estimated at approximately USD 15 billion, and when combined with other immediate economic losses, including business interruption, disaster relief, and other costs, is considerably larger. As with other sectors, insurance in China is growing rapidly, with a compounded annual growth rate of 25 percent since 2001. The property insurance industry, nevertheless, is underdeveloped. Total property premiums in China are about USD 15 billion, whereas the losses from the Wenchuan earthquake alone are likely to exceed USD 100 billion. According to most estimates, only 5 percent of property in China is insured, primarily among commercial and industrial users. When it comes to private dwellings, it is estimated that today only 1 out of 100 is insured against natural hazards. Clearly, the current property insurance market in China is dwarfed by the nation's need for catastrophe risk protection; at the present level of insurance penetration, China's insurance industry cannot provide significant compensation for large natural hazards losses.
Link to Data Set
Citation
“Wang, Jun. 2010. Catastrophe Insurance Policy for China. EAP DRM Knowledge Notes; No. 17. © World Bank. http://hdl.handle.net/10986/10127 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Advancing Disaster Risk Financing and Insurance in ASEAN Member States : Framework and Options for Implementation, Volume 1. Main report(Washington, DC, 2012-04)This report is part of a project being jointly conducted by the World Bank, the Global Facility for Disaster Reduction and Recovery (GFDRR), the Association of Southeast Asian Nations (ASEAN) Secretariat, and United Nations International Strategy for Disaster Reduction (UNISDR). It aims to provide capacity building on disaster risk financing and insurance (DRFI) in ASEAN Member States. DRFI is a relatively new topic and, therefore, training and capacity building of local stakeholders is essential. Governments must understand the benefits and the limitations of disaster risk financing and insurance as part of their comprehensive Disaster Risk Management (DRM) strategies. This report presents main findings and recommendations on DRFI in the ASEAN region. Following the World Bank disaster risk financing and insurance framework, it consists of five chapters, including this introduction. Chapter two presents a preliminary economic and fiscal risk assessment of natural disasters in ASEAN Member States. Chapter three provides an overview of the fiscal management of natural disasters currently implemented by ASEAN Member States. Chapter four reviews the state of the private catastrophe insurance markets, including property catastrophe risk insurance, agricultural insurance, and disaster micro-insurance. Chapter five identifies five main recommendations for strengthening the long-term financial and fiscal resilience of ASEAN Member States against natural disasters, as part of their broader disaster risk management and climate change adaptation agendas.Publication Catastrophe Insurance Market in the Caribbean Region : Market Failures and Recommendations for Public Sector Interventions(World Bank, Washington, DC, 2003-01)The Caribbean region suffers from a high degree of economic volatility. A history of repeated external and domestic shocks has made economic insecurity a major concern across the region. Of particular concern to all households, especially the poorest segments of the population, is the exposure to shocks that are generated by catastrophic events or natural disasters. The author develops a conceptual framework for risk management and shows that the insurance market for catastrophic risk in the Caribbean region remains a "thin" market characterized by "high" prices and "low" transfer of risk. He analyzes the possible market failures which could explain the lack of development of the catastrophe insurance market. Finally he outlines a set of recommendations for public sector interventions.Publication Insurance against Climate Change : Financial Disaster Risk Management and Insurance Options for Climate Change Adaptation in Bulgaria(Washington, DC, 2014)Bulgaria is exposed to nearly all types of climate extremes, including floods, droughts, and others, as well as earthquakes. The combination of insurance products, early warning systems, information campaigns, infrastructure adaptation measures, and strict regulations can be very useful in tackling the negative climate change impacts. This note provides an overview of the insurance sector s contribution to climate change - related risk prevention and highlights some of Bulgaria s ongoing disaster risk management (DRM) efforts. The note aims to raise awareness and emphasize the role that financial disaster risk management (FDRM), including insurance, can have in climate change adaptation. Based on a desk review and preliminary in-country stakeholder consultations, the note s findings are meant to motivate new thinking and serve as an engagement tool for ongoing in-country discussions, as well to help identify analytical work to be carried out in the future. Based on the preliminary review of Bulgaria s specific context, several ideas are being put forward to be further explored in the ongoing discussions toward creating FDRM products to address the major natural disasters (in particular, floods, droughts, and earthquakes) and improving adaptation to climate change. Potential areas of analysis that can be further explored and, as such, plant a seed for future action can focus on promoting risk prevention and deploying insurance instruments, including issues around traditional risk management, technology innovation, compulsory disaster insurance, forecast insurance, and disaster insurance pools. The analysis which will assess the extent of vulnerability of the subjects covered by existing insurance products, can subsequently lead to the decisions on priority insurance products to be introduced in the future.Publication Fiji(Washington, DC, 2015-02)This note aims to build understanding of the existing disaster risk financing and insurance (DRFI) tools in use in Fiji and to identify gaps where potential engagement could further develop financial resilience. In addition the note aims to encourage peer exchange of regional knowledge, specifically by encouraging dialogue on past experiences, lessons learned, optimal use of these financial tools, and the effect they may have on the execution of post-disaster funds. In 2012 alone Fiji experienced three major events with estimated total damage of F$146 million (US$78 million). Fiji is expected to incur, on average over the long term, annual losses of F$158 million (US$85 million) due to earthquakes and tropical cyclones. In the next 50 years Fiji has a 50 percent chance of experiencing a loss exceeding F$1,500 million (US$806 million). The country has a taken a proactive approach to DRFI and developed a finance manual for post-disaster budget execution. The government now has F$3 million (US$1.6 million) available in DRFI instruments to facilitate disaster response and also implemented tax concessions to encourage donations in the wake of tropical cyclone Evan. A number of options to support ongoing DRFI improvements in Fiji are presented for consideration: (a) the finance manual developed by the Ministry of Finance for post-disaster procedures should be finalized, and cabinet approval should be sought; (b) an overarching disaster risk financing and insurance strategy should be developed that includes options for risk transfer; and (c) assets should be identified in order to develop an insurance program for critical public assets.Publication Caribbean and Central American Partnership for Catastrophe Risk Insurance : Pooling Risk to Safeguard against Catastrophes Generated by Natural Events(Washington, DC, 2014-04)Countries in the Caribbean and Central America are highly vulnerable to the adverse effects associated with earthquakes, tropical cyclones, and other major hydro-meteorological events such as excessive rainfall. Aftermath of disasters typically place significant strain on the fiscal systems of affected countries. Consequently, ministers of the Central American integration system (SICA) and Caribbean community (CARICOM) countries have expressed a strong intention to collectively manage the disaster risk. By understanding the loss potential of disasters caused by natural events and the extent of public intervention in recovery and reconstruction efforts, governments can ascertain their respective contingent liabilities. Sovereign disaster risk financing and insurance can also safeguard against sudden macroeconomic shocks that negatively impact fiscal performance, and in turn, economic development. Caribbean and Central American governments are constrained in their ability to access quick liquidity to absorb fiscal shocks associated with natural hazard impacts because they have limited ability to create contingency funds, and limited capacity for external borrowing. The World Bank in partnership with the United States department of treasury assessed various options, which guided Ministers of Finance of Central America, Panama, and the Dominican Republic (COSEFIN) to identify the Caribbean catastrophe risk insurance facility (CCRIF) as the best option. The CCRIF provides cost-effective and fast-disbursing liquidity, and is an efficient way to finance a liquidity gap arising in the immediate aftermath of disaster.
Users also downloaded
Showing related downloaded files
Publication World Development Report 2008(Washington, DC, 2007)The world's demand for food is expected to double within the next 50 years, while the natural resources that sustain agriculture will become increasingly scarce, degraded, and vulnerable to the effects of climate change. In many poor countries, agriculture accounts for at least 40 percent of GDP and 80 percent of employment. At the same time, about 70 percent of the world's poor live in rural areas and most depend on agriculture for their livelihoods. World Development Report 2008 seeks to assess where, when, and how agriculture can be an effective instrument for economic development, especially development that favors the poor. It examines several broad questions: How has agriculture changed in developing countries in the past 20 years? What are the important new challenges and opportunities for agriculture? Which new sources of agricultural growth can be captured cost effectively in particular in poor countries with large agricultural sectors as in Africa? How can agricultural growth be made more effective for poverty reduction? How can governments facilitate the transition of large populations out of agriculture, without simply transferring the burden of rural poverty to urban areas? How can the natural resource endowment for agriculture be protected? How can agriculture's negative environmental effects be contained? This year's report marks the 30th year the World Bank has been publishing the World Development Report.Publication Services Unbound(Washington, DC: World Bank, 2024-12-09)Services are a new force for innovation, trade, and growth in East Asia and Pacific. The dramatic diffusion of digital technologies and partial policy reforms in services--from finance, communication, and transport to retail, health, and education--is transforming these economies. The result is higher productivity and changing jobs in the services sector, as well as in the manufacturing sectors that use these services. A region that has thrived through openness to trade and investment in manufacturing still maintains innovation-inhibiting barriers to entry and competition in key services sectors. 'Services Unbound: Digital Technologies and Policy Reform in East Asia and Pacific' makes the case for deeper domestic reforms and greater international cooperation to unleash a virtuous cycle of increased economic opportunity and enhanced human capacity that would power development in the region.Publication Global Economic Prospects, June 2024(Washington, DC: World Bank, 2024-06-11)After several years of negative shocks, global growth is expected to hold steady in 2024 and then edge up in the next couple of years, in part aided by cautious monetary policy easing as inflation gradually declines. However, economic prospects are envisaged to remain tepid, especially in the most vulnerable countries. Risks to the outlook, while more balanced, are still tilted to the downside, including the possibility of escalating geopolitical tensions, further trade fragmentation, and higher-for-longer interest rates. Natural disasters related to climate change could also hinder activity. Subdued growth prospects across many emerging market and developing economies and continued risks underscore the need for decisive policy action at the global and national levels. Global Economic Prospects is a World Bank Group Flagship Report that examines global economic developments and prospects, with a special focus on emerging market and developing economies, on a semiannual basis (in January and June). Each edition includes analytical pieces on topical policy challenges faced by these economies.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.