Swiss Re puts spotlight on ageing and natural disasters in Asia at World Economic Forum summit in China

The world is ageing – and Asia is ageing rapidly. Whereas it took France 115 years for its population of over 65s to double it will take China just 26 years, and South Korea and Singapore even less to reach the same result.

During the World Economic Forum summit in Tianjin, China which took place early September, Martyn Parker, Chairman Global Partnerships, said that retirement income will become a major issue in relation to ageing societies in Asia in the next few decades. This stems from a mix of factors including longer lives and lower birthrates. He also said that insurers can play a major role in forming part of the solution as the strain on government budgets intensify.

Keys to funding longer lives in Asia

"Public private partnerships will be a key aspect of the overall solution to the funding issues. Through the key stakeholders – governments, employers and insurers – working together, we could move towards an overall solution for funding longer lives. However, in order for this to happen, insurance needs access to consistent, improved and timely mortality data and for consistent accounting standards on an intra- and international basis."

Swiss Re Chairman Global
Partnerships Martyn Parker

Parker also suggested that the insurance industry and governments should take a lead on educating citizens of the potential financial consequences that an ageing society will have on them and the benefits of saving for their retirement, tackling any healthcare gaps.

"With the increasing strain that the financial crisis has exerted on government budgets, the public sector will in many cases be providing a minimum level of care and helping those most financially in need. This is prompting the fledgling middle classes in the region, including China, to turn more towards the insurance industry for assistance."

Topics also discussed include how insurance can support adaptation to natural catastrophe and climate risk –with the latter often taking the shape of too much or too little water.

Flood or drought - the benefits of planning ahead

Flooding affects more people and causes more damage worldwide than any other natural hazard and with the severe Thai floods last year, and the serious floods in China in early summer, Asia has seen more than its fair share. Losses have risen sharply in recent years and will increase further with more severe and frequent flood events. But although floods are such a common occurrence, flood insurance is not widely available, nor sufficiently affordable, for reasons that limit the commercial viability of insurance solutions.

Drought is one of the biggest economic and social risks to China because it constitutes the largest threat to food security, which is a key priority for the Chinese government. Climate change could exacerbate concerns about drought-related losses, but cost-effective adaptation measures are available.

Parker concluded: "In the past, governments have tended to finance disaster losses and other risks mainly after an event has occurred. This has in some cases led to a combination of higher debts and tax increases for the population, or less funding available for other government priorities such as education, public healthcare spending, etc. By sharing risks with the private insurance industry governments can reduce budget volatility and secure immediate funding without having future payback obligations. We are hoping more governments will start to think ahead about the risks their countries and people face, preparing for less physical and financial damage and swifter recovery."

Published 13 September 2012

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