The most powerful earthquake in China since 1950 shows the nation's insurance industry is decades behind those of the world's biggest economies.
Just 5 percent of the more than 20 billion U. S. dollars of damages from the quake in Sichuan Province is covered by insurance, according to estimates from an official at the China Insurance Regulatory Commission, Bloomberg News reported.
By contrast, about half of the 120 billion dollars of estimated costs from Hurricane Katrina, the most expensive storm in United States history, was insured by companies or the federal government, data compiled by analysts at Jersey City, New Jersey-based Property Claim Services show.
"The earthquake underscores how much room insurers have to penetrate into rural China," said Zhang Ling, who oversees 1.1 billion dollars for ICBC Credit Suisse Asset Management Co from Beijing and holds Ping An Insurance (Group) Co shares. "There'll be much more momentum and government support to do that after this year's natural disasters." China Life Insurance Co and Ping An, the nation's biggest insurers, have yet to extend their reach across China, where only 4 percent of the nation's 1.3 billion people have insurance, according to data compiled by KPMG International. By contrast, 77 percent of Americans own some type of life insurance policy.
The 7.8 magnitude quake has killed more than 22,000 people since May 12, damaged and destroyed homes and buildings in 44 counties and districts in Sichuan, and directly affected about half of the 20 million people who live in the region. At least 30,000 people remain buried under rubble.
"If a disaster like this happened in Europe or the US, the claims situation would be very different," said Michael Spranger, a Hong Kong-based earthquake analyst at Munich Re, the world's No. 2 reinsurer, after Swiss Re. "Natural disaster coverage rates are very low across Asia, in the single digits." China's quake occurred four months after the country's worst snowstorms in 50 years.
Source: Shanghai Daily
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