Typhoon Doksuri’s 2023 rampage across China leaves US$23 billion shortfall in insurance coverage, Munich Re says

Typhoon Doksuri, which triggered extreme flooding across China last summer, was one of the costliest natural disasters worldwide in 2023, leaving a multibillion-dollar shortfall in insurance coverage, according to experts.

The catastrophe caused US$25 billion in economic losses, the second-costliest natural disaster worldwide and the costliest in the Asia-Pacific and Africa region, German reinsurance firm Munich Re said on Tuesday. Only 8 per cent, or US$2 billion, of the losses were covered by insurance – far less than other major natural disasters of 2023.

The “trend [of] decreasing insurance gap, or increasing insurance penetration” of high-income countries “has not been observed to a similar degree in China,” said Munich Re’s chief climate scientist Ernst Rauch.

Overall, only about 5 per cent of disaster-related economic losses in China were insured in 2023, a slight increase from around 3 per cent a few years ago but still well below the global average of 38 per cent, the company said. The situation leaves Chinese families and businesses vulnerable to increasing damage as climate change exacerbates extreme weather.

The reinsurance firm called for China to push for broader adoption of natural-disaster insurance.

“The challenge is that the demand is not there,” Rauch said. “Consumers do not necessarily understand the benefit of insurance and how it helps individual livelihoods under natural disasters. All stakeholders, including the private sector, the insurance companies, and the governments, have a responsibility to inform people of how to protect themselves from such risks.”