Climate change: only 6 per cent of flood-related losses in southern China last year were underwritten, exposing huge insurance gap: Munich Re

Name: Record rainfall in southern China affects 3.75 million people, causes severe economic losses
Uploaded: 2023-01-10T10:42:27.000Z
Duration: 1 min 20 s
Description: Record rainfall in southern China affects 3.75 million people, causes severe economic losses

Floods in Guangdong, Guangxi and Fujian provinces last year caused US$5 billion of losses, but only US$300 million or 6 per cent was insured, according to Munich Re

Losses from global natural disasters were around US$270 billion last year, but insured losses reached US$120 billion, above the five-year average of US$97 billion

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This aerial photo shows a flooded area after heavy rains in Yingde, Qingyuan city, in China’s southern Guangdong province, last year. Photo: AFP

Yujie Xuein Shenzhen

Published: 6:42pm, 10 Jan 2023

The floods that ravaged southern China in May were the fifth-worst natural global catastrophe last year, but only a fraction of the losses were insured, revealing a huge insurance gap in the world’s second-largest economy and the threat posed by climate change, according to a report by reinsurer Munich Re.

The disastrous floods in Guangdong, Guangxi and Fujian provinces caused US$5 billion of losses, but only US$300 million or 6 per cent was insured, the report showed. The level of insurance in China was below that for other major countries such as the US, Japan and Australia, which experienced severe natural calamities last year.

Overall losses from global natural disasters were around US$270 billion last year, close to the average for the last five years, while insured losses were significantly above the five-year average of US$97 billion, reaching about US$120 billion last year, according to the report released on Tuesday.

“Climate change is taking an increasing toll,” said Thomas Blunck, member of the board of management at Munich Re. “The natural disaster figures for 2022 are dominated by events that, according to the latest research findings, are more intense or are occurring more frequently. In some cases, both trends apply.”

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Record rainfall in southern China affects 3.75 million people, causes severe economic losses

Hurricane Ian was the largest natural catastrophe in 2022, causing 150 deaths and an overall loss of US$100 billion as it left a trail of destruction in western Cuba and the southeast US from late September to early October. However, US$60 billion of the losses were insured. It was followed by the floods in Pakistan from June to October, which killed 1,740 people and led to US$15 billion in total losses, with only a fraction insured, according to Munich Re.