Climate change: only 6 per cent of flood-related losses in southern China last year were underwritten, exposing huge insurance gap: Munich Re
The floods that ravaged southern China in May were the fifth-worst natural global catastrophe last year, but only a fraction of the losses were insured, revealing a huge insurance gap in the world’s second-largest economy and the threat posed by climate change, according to a report by reinsurer Munich Re.
The disastrous floods in Guangdong, Guangxi and Fujian provinces caused US$5 billion of losses, but only US$300 million or 6 per cent was insured, the report showed. The level of insurance in China was below that for other major countries such as the US, Japan and Australia, which experienced severe natural calamities last year.
“More needs to be done in the emerging markets to protect people and insure their growing assets against the financial shock of natural disasters – especially as weather disasters become more extreme due to climate change,” Kassow said.
China’s agricultural sector was not spared from the natural disasters. In addition to the record floods last year, a prolonged heatwave and drought in China also led to water shortages and crop failures. The damage, including losses from crop failures, could be in the “mid-single-digit billions”, virtually none of which would have been insured, according to Munich Re’s estimates.