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China - The flood catastrophe insurance system must be established as soon as possible - July 31, 2020

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  • China - The flood catastrophe insurance system must be established as soon as possible - July 31, 2020



    The flood catastrophe insurance system must be established as soon as possible

    09:07 July 31, 2020 Source: Economic Daily
    Original title: Flood catastrophe insurance system needs to be established as soon as possible

    □ Jiang Fan
    Commercial household property insurance, corporate property insurance, agricultural insurance, motor vehicle insurance, etc. on the insurance market in my country all contain the responsibility for property losses caused by floods. Dispersing flood risk in various insurances actually manages flood disasters as general risks. Dispersing catastrophe insurance liability among various types of insurance will naturally result in a lower proportion of claims. The flood catastrophe insurance system should be constructed through more modern means and mechanisms, combining government disaster relief with commercial insurance

    In recent times, continuous heavy rainfall in the southern region has caused natural disasters such as waterlogging, floods, and mudslides. With the emergency launch of flood prevention and disaster relief operations, the topic of catastrophe insurance has heated up again. Recently, at the mid-2020 work conference and disciplinary inspection and supervision work (telephone) meeting held by the China Banking and Insurance Regulatory Commission, the content of “strengthening the role of insurance in the disaster protection system and accelerating the development of catastrophe insurance” attracted attention.

    The establishment of catastrophe insurance, especially the flood catastrophe insurance system, has been called for a long time, but has not been established due to various reasons. However, the insurance industry has not given up various attempts at flood insurance. Up to now, commercial household property insurance, corporate property insurance, agricultural insurance, motor vehicle insurance, etc. on the insurance market in my country all contain the liability for property losses caused by floods, and life insurance products also have insurance compensation liabilities for personal injuries and deaths caused by floods. These insurance products can play an important role in post-disaster reconstruction with the support of disaster relief policies and the green channel for insurance claims. In particular, agricultural insurance plays a more obvious role in protecting agricultural production losses caused by floods.

    However, the practice of dispersing flood risk in multiple insurances is obviously flawed, because this is actually managing flood disasters as general risks. If catastrophe insurance liabilities are dispersed among various types of insurance, the final claim ratio will naturally be Relatively low. This has caused an unavoidable problem-compared with the economic and social losses caused by floods, the proportion of risks covered by insurance compensation is very limited. Taking the 1998 flood as an example, the total loss was 250 billion yuan, and insurance coverage was about 3 billion yuan, which was just over 1%.

    To change this embarrassing situation, it is necessary to establish flood catastrophe insurance as soon as possible. my country is a country with many rivers. Flood risk is always an important component of social risk and an important part of catastrophe risk. It is very important to strengthen flood catastrophe risk management. Many experts have suggested that compared with earthquake insurance, flood insurance should be established and promoted with priority. The probability of an earthquake for China is relatively low, and its impact is relatively narrow. Flood disasters are completely different. Not only do they have a higher probability of occurrence, they also have a greater impact. Therefore, it is only natural to establish a flood catastrophe insurance system as soon as possible.

    In fact, as early as 1997, my country's first law to regulate the prevention and control of natural disasters-the "People's Republic of China Flood Control Law" proposed that the state encourages and supports flood insurance. But at present, only a few forms of flood insurance practice in my country are in the exploratory stage, and they only play a role in some areas and areas. Compared with the huge property losses caused by floods to my country every year, it is nothing short of a drop in the bucket. At the same time, due to various reasons, there is still a lack of more specific regulations and related policy support for flood insurance. There is still a blank in flood and other catastrophe insurance legislation. In addition, there are conflicts and conflicts in the management of river basin and administrative regions. It is necessary to solve these problems. The problem requires a higher level of systematic layout of China's flood insurance system. In other words, the relevant top-level design is indispensable and imminent.

    From an international perspective, there are already mature experiences in the design of national catastrophe insurance systems. For example, some states in the United States have flood insurance systems or compensate flood losses through catastrophe insurance systems. At present, my country's defense against flood disaster risks is more limited by flood control project construction, government relief or private donations. Although these methods have more Chinese characteristics, if you want to establish a more efficient flood risk sharing system, it is obvious that further innovation is needed to build a flood catastrophe insurance system through more modern methods and mechanisms, combining government disaster relief with commercial insurance. Only in this way can the efficiency of disaster prevention and mitigation and economic compensation be improved



    http://money.people.com.cn/n1/2020/0...-31805273.html
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