Although China has experienced almost two decades of rapid economic growth, usually associated with significant growth in the insurance market, still only 3 percent of properties are insured against earthquake and 5 percent against typhoons and floods. China’s insurance penetration is, in this sense, still comparatively low, particularly outside the agricultural sector.
As a consequence of this low level of insurance, insurance claims were, after the Huaije and Yangtze River flooding in 2007, only able to cover 6 percent of total estimated loss. In addition, during the Wenchuan Earthquake in 2008, payouts made by the insurance industry only equalled about 1 percent of total losses.
From these examples there can be learned that insurance plays a key role in resilience, since it prepares companies for future disasters and enables them to bounce back from disasters.