Global reinsurance giant Swiss Re has partnered with China’s Ping An Property & Casualty Insurance Company of China, Ltd to develop and deliver mobile-enabled parametric insurance protection against typhoons.
The new parametric solution is China’s first mobile-enabled coverage for property losses as a result of typhoons, and covers eight coastal provinces in Southeast China that are susceptible to typhoons.
Swiss Re explains that the solution provides real-time tracking of typhoon paths and wind speeds, and utilising data from the national meteorological center of China, offers automated claims to its users.
An important and beneficial element of the new solution concerns its parametric trigger structure, which is also linked to data from China’s national meteorological center, and enables payout within in three days of an event.
Swiss Re explains that the solution’s parametric design supports enhanced typhoon response, and post-disaster recovery for the high-risk areas.
Under the partnership, Swiss Re will provide technical support and reinsurance services, and the new mobile-enabled solution will use Swiss Re’s catastrophe models and data on natural disaster events, which enables more accurate and affordable quotes to Ping An’s clients.
John Chen, President of Swiss Re China, commented; “Typhoons are the most often and costliest natural catastrophes which occur in China. They can cause severe life and property loss in economically developed and densely populated regions.
“We want to leverage on our experience in using cutting-edge technology to develop tailor-made solutions, together with our clients to protect the people who are potentially affected by these natural catastrophes. The successful launch of this product can serve as an important example for other regions affected by similar natural disasters.”
The innovative solutions covers the following eight coastal Southeast Chinese provinces; Guangdong, Zhejiang, Shanghai, Fujian, Jiangsu, Guangxi, Shandong, and Hainan.
Designed to provide an affordable and easy-to-use means of protecting against economic losses from typhoons, customers are able to purchase coverage, make inquiries and complete the claims process all from a mobile device.
Swiss Re explains that when a typhoon occurs, customers can access an inquiry page, and determine whether a claim has been triggered and then submit a self-service claim. Next, the system calculates a claim amount, which is then settled within three days.
The maximum payout the solution offers per address for individuals is RMB 20,000 (roughly $2,941), and RMB 500,000 (roughly $73,530) per address for enterprises.
China is susceptible to a range of natural catastrophe events, with typhoons often being amongst the most damaging, costly, and frequent. After an event takes place there is often a real and urgent need for post-event funding to enable recovery, and where insurance protection is limited the government often foots the bill, which can take time to be settled.
An innovative, mobile-enabled parametric solution could go some way to mitigating economic losses and improving post-disaster recovery.
A mobile-enabled solution could promote greater insurance penetration for typhoon cover, and the three-day payout component offered via its parametric structure should enable individuals and enterprises to recover much faster when an event does take place.
Mike Mitchell, Head of Property and Specialty Reinsurance, Swiss Re, said; “China is a vast country that experiences diverse natural disasters, but has a low level of insurance coverage, which leaves a significant protection gap. Swiss Re’s rich experience in catastrophe modelling and strong data analysis capability can help insurance companies to better evaluate risk and price their products. Products such as this help accelerate economic recovery after natural disasters, and allow people to return quickly to normal life.”
Towards the end of last year Swiss Re announced it was backing a $350 million parametric disaster insurance pilot for the Chinese province of Guangdong, and is now supporting the expansion of parametric insurance across more of China.
As China continues to grow its use of parametric insurance solutions for its catastrophe risks, it could result in an opportunity for the broader reinsurance market, and also insurance-linked securities (ILS) market to participate via parametric catastrophe bonds linked to typhoon risk, for example.
China has been evolving and developing its catastrophe risk transfer industry in recent times, with important figures underlining the need for improved disaster risk management via the expansion of catastrophe insurance, which would bring a substantial volume of new Chinese risk to the reinsurance and ILS markets.
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