Catastrophe insurance system is indispensable
Jiang Fan
Catastrophe insurance is a kind of quasi-public product, which depends on the joint efforts of the whole society to promote and improve it.
First of all, in terms of mechanism and organizational structure, the catastrophe relief and compensation method that is completely government-supported should be changed, and the catastrophe insurance system should be designed and improved through the principle of "government promotion and commercial operation".
At the same time, the design of the catastrophe insurance system must be improved with innovative thinking.
Since the beginning of autumn, Henan, Shanxi, and Shaanxi have been hit by extreme weather again. The heavy rainfall in Shanxi alone caused direct economic losses of more than 5 billion yuan and 1,757,100 people in 76 counties were affected.
Faced with such a large loss, the catastrophe insurance system has once again become the focus of attention of all parties.
The establishment of a catastrophe insurance system has been around for a long time, but many problems still need to be resolved.
For example, the protection of losses caused by floods and rainstorms is dispersed in various insurance products, from corporate property insurance, agricultural insurance, motor vehicle insurance to personal insurance, all of which contain the liability for compensation for property or personal injury caused by floods.
Dispersing catastrophe insurance responsibilities in general insurance products means that catastrophe risks are reduced to general risks for management, and the proportion of claims will inevitably decrease.
The data shows that for a long time, the proportion of insurance compensation in China's natural disaster losses has been less than 10%, which is far lower than the global average of about 40%.
In recent years, the proportion of insurance payments in post-disaster economic compensation has increased, but overall there has been no significant improvement.
After all, the responsibility of catastrophe protection is by no means something the insurance industry can carry on its own shoulders.
In recent years, catastrophe risks have shown new characteristics.
With the deepening of China's urbanization and the continuous improvement of asset value, once extreme weather is encountered, catastrophe losses will become greater and greater.
In order to ensure stable economic development and improve the level of major disaster risk management, the urgency of building a diversified risk sharing system has become increasingly prominent.
Judging from the practice of establishing a catastrophe insurance system, the work results are still obvious.
Local catastrophe insurance pilot projects have been implemented in 15 provinces and cities, and the coverage and responsibilities have been extended to disasters such as typhoons and floods, and a comprehensive risk solution has been initially formed.
For example, from 2018 to 2020, Guangdong Catastrophe Insurance has paid a total of 984 million yuan in compensation, providing important economic support for post-disaster recovery and reconstruction.
Catastrophe insurance is a kind of quasi-public product, which depends on the joint efforts of the whole society to promote and improve it.
First of all, in terms of mechanism and organizational structure, the catastrophe relief and compensation method that is completely government-supported should be changed, and the catastrophe insurance system should be designed and improved through the principle of "government promotion and commercial operation".
With the financial support of the central and local governments, a multi-level catastrophe risk diversification mechanism including insurance companies, reinsurance companies, catastrophe protection funds, and catastrophe bonds will be gradually formed.
Allow different levels of protection to connect and complement each other, perform their duties, truly establish an efficient catastrophe insurance system, and change the current fragmented and unrelated catastrophe management methods.
At the same time, the design of the catastrophe insurance system must be improved with innovative thinking.
One is to broaden the horizon.
It is necessary to re-examine the current logical changes in the frequency, boundary, and loss of catastrophes caused by climate change and economic transformation. Accordingly, the insurance coverage, price, and risk matching degree should be targeted to improve the system design.
The second is innovation in means.
Catastrophes are characterized by low frequency and high loss, and require higher amounts of compensation funds.
How to establish a catastrophe fund to achieve inter-period accumulation of insurance funds to provide full claims is still a new field.
In late September this year, the China Banking and Insurance Regulatory Commission issued the "Notice on Issues Concerning the Issuance of Catastrophe Bonds by Domestic Insurance Companies in the Hong Kong Market". On October 1, the catastrophe bonds initiated by China Re P&C were successfully issued in Hong Kong. A useful attempt was made to broaden the channels for diversifying catastrophe risks.
The third is to optimize management.
When insurance companies underwrite catastrophe insurance, they need to continuously improve their underwriting and management levels, among which technological empowerment should become a breakthrough.
Whether it is economic development or people's livelihood needs, there is an urgent need to strengthen the construction of a catastrophe risk insurance system, which is indispensable.