Crop damage from China floods reduces by 70 percent over 20 years

Although in 2016 China experienced the worst flooding since the one-in-100-year flood event of 1998, the impact of the flood has decreased significantly, according to Aon Benfield.

The company said that despite similar hazard patterns to the 1998 event, flood damage to crops in 2016 was 70 percent lower than the earlier event.

According to Aon Benfield’s Natural Catastrophe Report for China in Summer 2016 report, 68 percent fewer crops were damaged in this summer’s event despite the fact that the Yangtze River experienced 20 percent higher-than-average precipitation in both events.

A major reason behind the reduced flood losses is the Chinese government’s increased investment and capabilities in flood forecast and control, boosting defence systems since 1998. Since this summer’s Yangtze River and the north-eastern China floods, at least 130,000 claims related to storm and floods have been reported.

Based on government statistics, economic losses will exceed CNY255.8 billion ($38.1 billion) while Aon Benfield estimates total insurance loss to reach over CNY4 billion.

The total insurance loss is estimated to be approximately 1.5 percent of total economic loss, reflecting a low level of insurance penetration.

Yifan Fu, head of Aon Benfield Analytics Greater China, commented: “As Chinese re/insurers begin to analyse their losses from the floods, the report provides a market overview to help prepare for the renewal season.

“While it is still early days to predict the full impact of the summer events, it is clear that the low insurance penetration will provide a potential for growth going forward.”