New insurance solution for disaster relief in China

China Development and Research Foundation (CDRF) on Wednesday launched a research report on parametric insurance solutions for the country's disaster relief system reform.

The research, sponsored by the world's largest reinsurer Swiss Re, revealed that parametric insurance solution is a feasible fiscal instrument for disaster relief and post disaster reconstruction in China.

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The research looked at the current disaster relief system in China, studied the potential and feasibility of applying parametric insurance solutions as a fiscal instrument for disaster relief and post disaster reconstruction and made suggestions on reforming the existing fiscal reserve systems by leveraging on parametric solutions.

As an applicable pilot project of the research program, Swiss Re designed a parametric insurance program against earthquake related fiscal risks for the Tianjin municipal government.

Jin Fang, deputy secretary general of CDRF, said that disaster relief has always been a key focus of CDRF. And this research program is part of the continued effort since the earthquake in Sichuan in 2008.

Parametric insurance solutions are important supplement to traditional insurance solutions and should be considered as a key instrument in disaster relief, according to Jin.

Also in managing natural disasters risks, the Shenzhen municipal government purchased a disaster liability insurance program to compensate individual injuries of the residents in Shenzhen against defined natural disasters, thus becoming the very first local government in China arranging such disaster related insurance programs. Swiss Re is the technical advisor and a leading reinsurer for this program.

Swiss Re initiated this research program in 2013 as a sponsor for CDRF to lead the program with a panel of distinguished institutions, including the Research Institute for Fiscal Science under the Ministry of Finance, the Policy Research Office of the China Insurance Regulatory Commission, the Peking University and the Nankai University.