China’s insurance sector is under growing pressure due to extreme weather events like droughts, floods, and landslides. Despite improvements, China’s disaster insurance coverage lags behind global standards, covering only about 10% of natural disaster losses compared to the global average of 40%, according to the National Financial Regulatory Administration (NFRA).
Recent floods in Guangdong, Sichuan, and Henan have affected over 20 million people and caused significant damage, including a deadly bridge collapse in Shaanxi. This year alone, insurance claims from flood-affected areas have reached 3.21 billion yuan (US$441 million), with payouts exceeding 1.1 billion yuan.
Insurance experts, including Peggy Ding from Marsh China, highlight the need for innovative insurance products and a multi-tiered risk protection system to address climate change risks effectively. The NFRA and the Ministry of Finance have updated the insurance system to cover a broader range of disasters and increase coverage limits, but more tailored solutions are needed. Enhanced climate data sharing is also crucial for improving risk assessment and management.