Swiss Re is going to make its first payout to Guangdong province under a pilot reinsurance program following the destructive aftermath of Typhoon Haima last week.
The pilot program covers seven prefectures in Guangdong province. Guangdong is China’s most populous economic hub, and is covered against the financial effects of the risk of natural catastrophes.
Under the agreement, Swiss Re will cover the province for losses up to $350 million from tropical cyclones and excessive rainfall.
Guangdong has heavy exposure to natural catastrophes and accounts for more than $1 trillion of China’s total GDP.
Swiss Re developed the pilot program in partnership with local insurers led by the People’s Insurance Company of China (PICC) in response to the Chinese government’s efforts to set up a natural catastrophe insurance system. The initiative will be adjusted and renewed every year.
Martyn Parker, chairman of Swiss Re Global Partnerships, said, “A major disaster is not just devastating for the lives and livelihoods of local people, but is also likely to affect the longer-term economy of the region. Guangdong's move to put measures in place before disasters strike has already proven its worth.”
John Chen, Swiss Re's head of reinsurance China and China country president, also noted, " The strong partnership between the government, PICC, and Swiss Re has been pivotal in delivering this innovative scheme. We hope the Guangdong and Heilongjiang models will also serve to benefit other provinces in China."
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