Swiss Re Reinsures Guangdong Prefectures Against Natural Disaster Risk

by swisscham in Bank, Finance, Insurance

Swiss Re has entered into an agreement as sole reinsurer to protect seven prefectures of Guangdong province, China, in partnership with local insurers led by the People’s Insurance Company of China (PICC) in 2016. The pilot helps protect China’s most prominent economic hub against the financial impacts of natural disaster risk and the first payout was already triggered after super-typhoon Haima made landfall in the city Shanwei on 21 October 2016. The program will be rolled out in a total 10 prefectures by the end of this year. The pilot program offers insurance cover for a maximum value of USD 350 million, and is expected to be adjusted and renewed annually. It uses rainfall and tropical cyclone wind speed indices to trigger policy claims, ensuring fast payout. This is the second pilot programme to protect the balance sheets of provincial governments in China against the economic impacts of major disasters. It complements the previously announced reinsurance protection scheme in Heilongjiang province, announced on 3 August 2016 this year, which focuses primarily on poor rural communities. Swiss Re developed both programs in response to the Chinese Central Government’s imperative to build a Disaster Insurance System. The schemes could serve as a model to insure other provinces in the country.

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