2010年-世界发展银行全球_Catastrophe_Insurance_Policy_for_China_4页_624kb

EAP DRM KnowledgeNotes: China Catastrophe Insurance Policy Summary

Core Content

This document outlines the need for a national catastrophe insurance system in China, emphasizing the country's high vulnerability to natural disasters and the inadequacy of the current insurance market. It proposes the establishment of a China Catastrophe Insurance Pool (CCIP) as a potential solution, drawing on successful models from other countries.

Main Objectives

The proposed catastrophe insurance policy aims to achieve the following key objectives:

• Reduce financial vulnerability of homeowners and small and medium enterprises (SMEs) to natural disasters through affordable catastrophe insurance.
• Transfer fiscal risk from the government to the private insurance industry by insuring private property and business premises.
• Create economic incentives for proactive disaster risk management by linking insurance premium rates to the level of risk mitigation achieved by communities.
• Provide immediate fiscal support to provincial governments for post-disaster relief and infrastructure recovery.
• Foster the growth of the domestic insurance industry.

Key Information

Current Insurance Landscape in China

• The property insurance industry in China is underdeveloped.
• Total property premiums are about USD 15 billion, but losses from major disasters, such as the Wenchuan Earthquake, can exceed USD 100 billion.
• Only 5% of property is insured, with 1 out of 100 private dwellings covered against natural hazards.

Proposed China Catastrophe Insurance Pool (CCIP)

• The CCIP would be a public corporation managed by an independent board of directors with expertise in insurance, finance, and related sectors.
• It would be privately funded and financially self-sustainable, operating under sound actuarial practices and government insurance regulations.
• The CCIP would aggregate catastrophe risk from compulsory residential insurance policies and outsource management to the private sector.

Policy Components

• Participation: Compulsory for all registered homeowners and SMEs.
• Risks Covered: Initially focused on earthquake and earthquake-initiated hazards, with flood, wind, and other natural hazards to be added later based on technical development.
• Policy Terms: Options include policy limits set by the owner, flat minimum cover, or insured limits based on median property values.
• Risk Rating: Premiums would vary based on location, size, and construction quality of properties.
• Risk Underwriting: Compulsory policies would be issued by participating insurance companies, with CCIP acting as a backer.
• Claims Settlement: Requires special training for adjusters to ensure consistent loss assessments.

Government Role

• The government would introduce special catastrophe insurance legislation.
• Enforce compulsory insurance requirements.
• Provide a backstop contingent capital facility to ensure program solvency in case of highly unlikely catastrophic events.

Risk Financing

• The CCIP would rely on private reinsurance and its own reserves.
• The government would offer a backstop liquidity facility to cover claims from unlikely catastrophic events.

Incentives and Subsidies

• Local governments would be required to adopt disaster risk management plans.
• Subsidies should be explicit and well-targeted to avoid undermining insurance effectiveness.

Sovereign Fiscal Hedging

• Governments and private sectors require separate arrangements.
• Modern risk hedging instruments and sovereign regional structures could be used to address post-disaster funding needs.

Next Steps

• The Chinese government should consider promulgating framework catastrophe insurance legislation.
• Establish a special working group comprising key ministries, private industry, and technical experts to develop the specific operating procedures and norms for the CCIP.

Conclusion

The document highlights the urgent need for a comprehensive catastrophe insurance policy in China to mitigate the financial impact of natural disasters, support post-disaster recovery, and promote risk reduction. It advocates for the creation of a CCIP as a viable mechanism, with government oversight and private sector involvement to ensure effectiveness and sustainability.