Catastrophe insurance system to be established
500 years in a rainstorm attacked in eastern guangdong, Yangtze river happened since 1987, the largest of three gorges reservoir flood appeared the biggest since resoureces incoming flood… The news from the ministry of water resources in China, said earlier this year, the XunQing happened, since the police serious floods sin, resulting in direct economic losses of around 1422 billion yuan.
Huge losses in China again torture catastrophe insurance mechanism. Circ vice President in June ritual reflects the lujiazui BBS had said with related ministries, circ is implementing mechanism of catastrophe insurance investigation for years, some concrete scheme formulated.
“The insurance company due to a lack of corresponding policy support, reduce catastrophe risk channel is limited, commercial operation cannot separately bear catastrophe risk. In early 2008 low-temperature recent freeze disaster, insurance pay reparations accounted for only direct economic losses, and the global average of 3.6% a greater level of the gap.” China related personnel introduces picc property.
“China is 9900 billion yuan, insurance claims losses only 3000 million to 4000 billion yuan. For example wenchuan earthquake insurance compensation is only 18 billion yuan, accounting for 8450 billion yuan RMB economic losses of 0.2%.” Swiss reinsurance company’s catastrophe risk principals PeterHausmann said.
But foreign catastrophe losses, insurance compensation average more than economic losses of 30%, some developed countries even reach 60-70% insurance rates.
Swiss reinsurance issue of the catastrophe bonds may give China is in the preparation of catastrophe insurance enforcement mechanism for reference. Catastrophe bonds (CatBond) have risk transfer function, this bond is also risk link securities (one of ILS).
The function of about insurance links that Rachel securities to global non-life insurance risk transformation, said WangXing structure designers to insurance, reinsurance companies, insurance links such as an issuer of securities is through the most important function of the insurance risk transfer to the capital market, improve the insurance company and reinsurance company accept insurance capacity; Meanwhile, insurance link securities is also a kind of capital management tool, it can make the investors get a pure investment insurance risk of opportunities.
In the United States will earthquake risk through bonds form transferred to the capital market, for example, investors can buy and American earthquake insurance risk associated with bonds, if within the prescribed time limit, the United States does not have an earthquake, investors can on schedule, expire to still receive interest recoverable principal. But if America happened earthquake, according to the earthquake triggering conditions of bonds, such as earthquake series, occurrence areas etc. Factor, investors could lose some or all of the principal and interest, issuers can use these funds to undertake insurance compensation.
To provide data showed that rick, 2004, global natural disasters reinsurance market always accept insurance capacity about $112 billion, including catastrophe bonds of accept insurance capacity provided by about 40 million us dollars, accounting for 4 per cent of total amount; In 2009, global distribution catastrophe bonds amounts to $140 billion us dollars, accounting for global catastrophe reinsurance to accept insurance capacity 7% of $200 billion in total, regardless of the amount of absolute or than have greatly improved.
Will the catastrophe risk transfer to the capital market is rapid development worldwide, so far, many countries in different kinds of natural disaster risk, been securitization, such as America, Europe, Japan, Australia, Mexico, Turkey and other countries of floods, hurricanes, earthquake and risks are used securitisation means the transfer of risk.
Rachel to global non-life insurance risk transformation MartinBisping says if a director of China if catastrophe bonds, international investors will also willing to buy.
