Region lost US$118b from natural hazards last year
Emilyn Yap Business Times 19 Oct 09;
ASIA remains underinsured against natural catastrophes even though the region suffers huge losses from them.
According to data from Munich Re, natural catastrophes triggered global losses of some US$200 billion last year, and Asia had to swallow more than half of that, or US$118 billion.
Insurance covered only US$45 billion of the global losses, and Asia's share of that was just 5 per cent or US$2.25 billion.
China in particular was hit by several large-scale disasters. The Sichuan earthquake led to overall losses of US$85 billion, and it was considered the world's costliest natural catastrophe last year. The snowstorms which befell several Chinese provinces ranked third, precipitating overall losses of US$21.1 billion.
More recently, earthquakes in Indonesia and floods in Taiwan and the Philippines have also led to shocking damages.
Despite these losses, there has been little increase in the take-up of insurance against natural catastrophes in Asia, said Munich Re's Greater China and South-east Asia chief executive Tobias Farny in an interview with BT.
There can be big risks in insuring against such hazards, he noted. 'For large natural catastrophes, the risks are not for one single player to take up,' Mr Farny said.
A possible solution is for governments and private insurers to pool their resources together to provide the insurance. 'There are different ways of doing this - the base cover can be provided by the government and the excess cover by the private insurance industry, or the other way round,' Mr Farny explained.
He added that Munich Re is in talks with governments on public-private partnerships. According to a report from an Asian Development Bank-supported conference in November last year, Indonesia is the only country in South-east Asia with a catastrophe pool for earthquakes.
Singapore can help promote such projects given its strong position as a reinsurance centre, Mr Farny said. 'Its role can be to moderate these initiatives and bring together the market players. It also has the universities and academia which can bring in the modelling knowledge.'
