According to the South China Morning Post, the Communist Party’s third plenum included discussing the setting-up a catastrophe insurance scheme for the people and property for natural disasters such as earthquakes.
Sally Yim, a senior credit officer at rating agency Moody’s Investors Service, said: “A catastrophe insurance scheme has been under discussion for years, but we expect a concrete plan to be launched within a year.”
Xiang Junbo, chairman of the Chinese Insurance Regulatory Commission, said in an internal meeting after the plenum that “an insurance system will be needed to diversify the risks of catastrophes.”
Apart from lack of demand, a key issue in China is the reluctance of property and casualty insurers to take on the risks of catastrophes, such as insuring properties in major earthquake zones.
Such a scheme could involve a government backed insurance pool, so the risks are shared between the industry and government.
Reinsurer Munich Re has long called for such a scheme. Catastrophe schemes in Japan and New Zealand have been heralded as good examples to follow.
Filed under: 2. Insurance