Big disasters, but low claims in China, Russia

Severe monsoon rains in China have caused widespread destruction and significant economic losses, but are expected to have little impact on the insurance industry.

The rain has caused flooding and landslides and destroyed homes and infrastructure across 28 provinces and regions, resulting in significant loss of life.

But a Marsh Risk Consulting update says historical figures show the “huge” economic losses are unlikely to translate into significant insured losses.

A recent study by Munich Re found that the 10 largest floods in China since 1980 have caused economic losses of $US135 billion ($151 billion), while insured losses have been only about 1%-2% of this amount.

The difference was attributed to low insurance penetration in rural areas and official efforts being focused on protecting economic assets rather than lives. Marsh says the recent wildfires in Russia have caused extensive damage, numerous deaths, severe smog and concerns about radioactivity.

The full impact of the fires remains unclear, but many industries have been affected and economists in Russia have forecast a $US15 billion ($16.8 billion) decrease in economic output.The assets of China’s insurance sector totaled 4.57 trillion yuan ($672 billion) at the end of July 2010, according to that country s insurance regulator.

Premium revenue of the sector during the first seven months of the year totaled 903.91 billion yuan. Of that, 670.14 billion yuan came from the personal insurance business and 233.77 billion yuan came from the property insurance business, the China Insurance Regulatory Commission (CIRC)