Wang, Zifa and Lin, Tun and Walker, George (2009): Earthquake Risk and Earthquake Catastrophe Insurance for the People's Republic of China. Published in: ADB Sustainable Development Working Paper Series No. 7 (June 2009)
Download (510kB) | Preview
The year 2008 witnessed the renewed interests in earthquake risk management and insurance in the People's Republic of China (PRC), after the Wenchuan earthquake hit the country in May. Located along the southeastern edge of the Euro-Asian Plate, the PRC has a relatively high seismicity, which is manifested by the frequent occurrence of large and disastrous earthquakes. Buildings and infrastructure in the earthquake-prone regions of the PRC have relatively low earthquake resistance levels. Hence, disastrous earthquakes result not only in large numbers of injuries and fatalities but also in huge economic losses from property damages. While the PRC began testing earthquake insurance programs in the late 1980s, the overall penetration rate remains very low. The low penetration rate not only creates disruptions for the government after a major earthquake but also, in some cases, delays the reconstruction efforts. Moreover, as a result of the low penetration of earthquake insurance in the PRC, the government serves as the predominant bearer of financial risk from earthquake catastrophes.
This paper discusses historical earthquakes and earthquake risk in the PRC and the recent developments of PRC's earthquake risk reduction efforts. The general principles of earthquake programs are explained and the critical issues of formulating earthquake programs in the PRC are discussed, including lessons from earthquake insurance in other countries and other catastrophe insurance in the PRC, data issues, loss risk modeling issues, financial risk modeling issues, legislative issues, and public awareness issues. The paper concludes with several policy directions that the Asian Development Bank can take to help the PRC in its design and implementation of earthquake insurance.
|Item Type:||MPRA Paper|
|Original Title:||Earthquake Risk and Earthquake Catastrophe Insurance for the People's Republic of China|
|Keywords:||earthquake insurance; China; earthquake risk; Wenchuan earthquake; catastrophe insurance|
|Subjects:||G - Financial Economics > G2 - Financial Institutions and Services
Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics
G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance ; Insurance Companies ; Actuarial Studies
Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming
|Depositing User:||Tun Lin|
|Date Deposited:||11. Mar 2010 18:02|
|Last Modified:||12. Feb 2013 17:00|
Asian Development Bank (ADB). 2009. Loan to the People's Republic of China for Emergency Assistance for Wenchuan Earthquake Reconstruction. Manila.
ADB. 2009. Technical Assistance to the People's Republic of China for Promoting a More Inclusive And Effective Disaster Risk Management System. Manila.
ADB. 2008. Observations and Suggestions on Earthquake Insurance: Lessons from International Experience and Key Issues for Developing Earthquake Insurance in the People's Republic of China. Manila.
ADB. 2008. Observations and Suggestions on Recommendations for Dealing with Transition from Disaster Response to Recovery. Manila.
ADB. 2008. Small Scale Technical Assistance for Natural Catastrophe Risk Insurance Mechanisms for the Asia and Pacific Region. Manila.
ADB. 2008. Technical Assistance to the People's Republic of China for Providing Emergency Response to Sichuan Earthquake. Manila.
ADB. 2005. Regional Technical Assistance for Development of Catastrophe Risk Insurance Mechanisms.Manila.
ADB. 2004. Disaster and Emergency Assistance Policy. Manila
China Earthquake Administration. 2008. The direct loss report of the 12 May 2008 Wenchuan earthquake.
Grossi, P., W. Dong, and A. Boissonnade. 2008. Evolution of Earthquake Risk Modeling. Proceedings of the 14th World Conference on Earthquake Engineering, October 2008, Beijing, China.
Grossi, Patricia. 2007. The 1679 Sanhe-Pinggu Earthquake – Implications for the Modern-Day Beijing Region. Risk Management Solutions, Inc.
Gurenko, E.N., R.R. Lester, and O. Mahul. 2007. Earthquake Insurance in Turkey: History of the Turkish Catastrophe Insurance Pool. World Bank.
Liu, Huixian, ed. 1986.The Great Tangshan Earthquake Damage Report. Seismology Press.
Risk Management Solutions. 2005. Creating a Technical Foundation for Earthquake Insurance in China. Available: www.rms.com/publications
Walker, G., T. Lin, and Y. Kobayashi. 2009. Is Flood Insurance Feasible? – Experiences from the People’s Republic of China. ADB Sustainability Working Paper Series, No.5. April.
World Bank. 2009. Catastrophe Insurance Policy for China.