2010 China floods will have limited impact on insurance industry, Guy Carp

Triggered by an unusually severe monsoon season, China experienced record-high water levels at 25 rivers in the summer of 2010, resulting in massive flooding that caused an aggregate estimated economic loss amount of approximately 350bn Yuan, or $52bn.

While the estimate for total insured losses is still being developed, the insured loss will likely only amount from 1% to 2% of the total economic losses stemming from the floods, due to low insurance penetration levels, the broker said.

And while varying from treaty to treaty, the impact on the majority of non-marine proportional reinsurance treaties is expected to be limited, it added.

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According to the report only a limited number of catastrophe excess of loss reinsurance treaties are expected to be affected, with 2010 flood losses impacting only the bottom layer.

“While China is exposed to virtually every type of natural disaster, earthquake, typhoon and flood have had the most devastating impact, with flood being the most frequently occurring peril. Our report seeks to provide a clearer understanding of the 2010 flood season, possible contributing factors and the growing role of re/insurance to mitigate the financial impact of catastrophes,” said David Lightfoot, Managing Director, Head of GC Analytics – Asia Pacific at Guy Carp.