NU Online News Service, Aug. 12, 3:38 p.m. EDT
Severe flooding in China this summer has caused massive destruction and tens of billions of dollars in damage, but is unlikely to have a large impact on the insurance industry, Guy Carpenter & Company's Instrat unit said.
Guy Carpenter issued a report, "Floods in China: August 2010," and said that flooding has left more than 2,100 people dead or missing country-wide and has caused damage--including the destruction of homes and infrastructure--across 28 provinces and regions of China.
As of Aug. 6, Guy Carpenter said the Chinese Ministry of Civil Affairs estimated economic losses from these flood-related disasters at around 275 billion Yuan ($40.6 billion at current exchange rate).
But despite huge economic losses, insured losses will likely be small.
Guy Carpenter cited a recent study by Munich Re and said that although the 10 largest floods in China since 1980 have caused total economic losses of $135 billion, the insured losses have only been 1 to 2 percent of that amount.
The reasons for this, according to the report, are due to low insurance penetration in rural areas of China as well as the country's concerted effort to protect economic, rather than human assets from flooding.
Guy Carpenter noted that flooding has been triggered by weeks of unusually severe monsoonal rains that have caused landslides and overflowing rivers.
Guy Carpenter also cited the Chinese Flood Protection Scheme and said that so far this summer, record-high water levels have been recorded for 25 rivers, with one such river reaching its highest level in 30 years.
Current flooding is reported to be the worst China has experienced since 1998, when more than 4,000 people died and 18 million people were displaced.
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