Swiss Re to make first pay-out under pilot reinsurance scheme in China
Swiss Re will make its first pay-out under a pilot agreement to protect seven prefectures of Guangdong province, China's most populated economic hub, against the financial impact of natural disaster risk.
Typhoon Haima, which made landfall in the city Shanwei on October 21, triggered the first pay-out as part of a pilot insurance programme in place.
The pilot covers the province against losses of up to $350 million from tropical cyclone and excessive rainfall, and is expected to be adjusted and renewed annually.
In partnership with local insurers led by the People's Insurance Company of China (PICC), the pilot was developed in response to the Chinese Central Government's imperative of building a natural catastrophe insurance system.
Guangdong is heavily exposed to natural disasters, and is responsible for over $1 trillion of China's gross domestic product (GDP).
Martyn Parker, chairman of Swiss Re Global Partnerships, said: "Guangdong is an important industrial production centre and highly exposed to natural disasters, particularly typhoon and flood.
“A major disaster is not just devastating for the lives and livelihoods of local people, but is also likely to affect the longer-term economy of the region. Guangdong's move to put measures in place before disasters strike has already proven its worth, when super-typhoon Haima triggered a claim. The city of Shanwei has received a payout from the insurance company less than a week after the typhoon struck."
John Chen, Swiss Re's head of reinsurance China and China country president, added: "Product innovation based on international experience has enabled the success of the Guangdong case. The strong partnership between the government, PICC, and Swiss Re has been pivotal in delivering this innovative scheme. We hope the Guangdong and Heilongjiang models will also serve to benefit other provinces in China."
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