Swiss Re reinsures China’s Guangdong province
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Swiss Re Ltd. said Friday it has agreed to serve as sole reinsurer for severe weather losses for seven prefectures in China’s Guangdong province in a partnership with local insurers led by the People’s Insurance Co. of China Holdings Co.
The pilot program offers insurance coverage for up to $350 million in losses from tropical cyclones and excessive rainfall, and will likely be adjusted and renewed annually, Swiss Re said in a statement. To ensure a fast payout, Swiss Re said the program uses rainfall and tropical cyclone wind indices to trigger policy claims.
The reinsurer said the pilot helps protect China’s most prominent economic hub against the financial impacts of natural disaster risk.
Guangdong, on the coast of southeastern China, is heavily exposed to natural disasters and is responsible for over $1 trillion of China's gross domestic product, according to Swiss Re.
Swiss Re said the first payout was triggered after Super Typhoon Haima made landfall in Shanwei, China, on Oct. 21. The program will be rolled out in a total of 10 prefectures by the end of the year.
This latest pilot program follows a similar reinsurance protection plan in Heilongjiang province in northeastern China that Swiss Re announced on Aug. 3 that focuses primarily on poor rural communities.
Swiss Re said it developed both programs in response to the Chinese Central Government's imperative to build a disaster insurance system. The programs could serve as a model to insure other provinces in the country.
“We hope the Guangdong and Heilongjiang models will also serve to benefit other provinces in China," John Chen, Swiss Re’s head of reinsurance for China and China country president, said in the statement.
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