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Reinsurance firm Swiss Re continues to expand its parametric risk transfer activities, this time with the launch and backing of the first county-level natural catastrophe index insurance product in China.
Swiss Re is backing and reinsuring a county-level index insurance cover for Mao County in Sichuan province, Financial News reported, the first parametric product to drop-down to the county level of coverage in China.
Swiss Re has previously backed province level parametric or index insurance products covering China catastrophe events (such as in Guangdong), but as data sources improve and become more granular and technology advances, the coverage can be calibrated to a smaller regional level.
The local and regional government has led the initiation of the project, with Swiss Re the exclusive provider of reinsurance support for the project as well as technical input on the design of the index or parametric triggers used.
Swiss Re is expected to continue putting its global technology resources to work in order to ensure the successful implementation of the catastrophe insurance project.
The catastrophe insurance is designed to cover earthquake and landslide or mudslide risks, we understand, with the parametric nature of the product being triggered by an indices meaning rapid payouts can be made to support disaster relief efforts in the region.
Mao County is one of the regions of China considered at highest risk of earthquakes.
Swiss Re worked alongside AVIC UNITA Property Insurance Company and the Maoxian County People’s Government to develop the catastrophe insurance product, analysing the perils in order to create relevant indices and to set trigger points.
John Donghui Chen, Swiss Re’s Country President for China, commented, “Mao County has set an example for the country’s counties and cities in establishing a sound catastrophe insurance system and improving the disaster management system.
“The project experience in other international and national provinces and cities will be brought into Maoxian County, and new technical strengths and resources will be injected into the Maoxian County Financial Risk Catastrophe Index Insurance Cooperation Project. It will also spare no effort to promote the successful experience of Maoxian to other parts of China. More places and people benefit.”
The product is expected to enhance the regional resilience of the local area and the local Government’s ability to respond to and provide relief in the event of natural disasters.
Swiss Re has also been behind a number of parametric risk transfer product launches through its Swiss Re Corporate Solutions division in recent months, including a river water level product in Europe, a parametric haze insurance in Singapore, a parametric tsunami derivative product for Japanese businesses, a parametric typhoon business interruption cover for Hong Kong, and Brazilian hydro-electric power coverage.