WEF Agenda Blog – China 2017
Insurance – China's path to advancing a clean energy future, food security and city resilience
By Jayne Plunkett, CEO Reinsurance Asia, Swiss Re
The China Development and Research Foundation (CDRF) launched today a research report on Parametric Insurance Solutions for Disaster Relief System Reform, which was sponsored by Swiss Re. The research concluded that parametric insurance solution is a feasible fiscal instrument for disaster relief and post disaster reconstruction in China.
Swiss Re initiated this research program in 2013 as a sponsor for CDRF to lead the program with a panel of distinguished institutions including the Research Institute for Fiscal Science under the Ministry of Finance, the Policy Research Office of the China Insurance Regulatory Commission, the Peking University and the Nankai University. The research looked at the current disaster relief system in China, studied the potential and feasibility of applying parametric insurance solutions as a fiscal instrument for disaster relief and post disaster reconstruction and made suggestions on reforming the existing fiscal reserve systems by leveraging on parametric solutions. As an applicable pilot project of the research program, Swiss Re designed a parametric insurance program against earthquake related fiscal risks for the Tianjin Municipal Government.
Swiss Re and the CDRF jointly organized a conference today announcing the research results. Some 50 senior Chinese officials, academics, senior representatives from the insurance industry and journalists participated in the conference.
Martyn Parker, Chairman of Swiss Re Global Partnerships, pointed out in his speech that: "Swiss Re is dedicated to helping nations manage their natural catastrophe risks. An important part of this is to understand how risk transfer solutions can reduce the fiscal burden of national catastrophes. The CDRF's research is an important step forward for Chinese disaster resilience. It shows that parametric based insurance solutions can work with the Chinese fiscal institutional framework."
Jin Fang, Deputy Secretary General of CDRF, highlighted that disaster relief has always been a key focus of CDRF. This research programme is part of the continued effort since the earthquake in Sichuan in 2008. Parametric insurance solutions are important supplement to traditional insurance solutions and should be considered as a key instrument in disaster relief.
Also in managing natural disasters risks, the Shenzhen Municipal government purchased a disaster liability insurance program to compensate individual bodily injuries of the residents in Shenzhen against defined natural disasters, thus becoming the very first government body in China arranging such disaster related insurance programmes. Swiss Re is the technical advisor and a leading reinsurer for this programme.
Moses Ojeisekhoba, CEO Reinsurance Asia of Swiss Re, said, "In markets exposed to high risks of natural catastrophe, such research and re/insurance solutions are critical for strengthening society's resilience. I'm glad we are taking the lead in China and setting up a good example for other markets."
Qin Lu, President of Swiss Re China, said, "We are very pleased to be able to participate in the two key initiatives with government bodies. We believe re/insurance is able to play a significant role in China to mitigate natural catastrophe risks, and these two projects are a good start."
Published 13 August 2014