China is reportedly pilot testing a catastrophe insurance system as part of plans to boost and extend the country's insurance market.
A top regulator was quoted by Reuters as saying that the system testing is being carried out to evaluate the feasibility of funding reconstruction work in the event of a natural disaster.
Currently, the risk is financed by the government and through donations, after earthquakes, floods and typhoons.
China Insurance Regulatory Commission vice chairman Wang Zuji told the publication that under the new system the risk will be shared between the government, insurance and reinsurance firms and individuals.
"The momentum in the pilot schemes is very good and that gives a tremendous support for the establishment of a catastrophe insurance system," Zuji added.
According to Zuji, the government intends to set up a calamity insurance fund to support the project. However, he declined to comment on the likely launch date of the overall system.
At present, trials are being conducted for the new catastrophe insurance system at the southern city of Shenzhen and Chuxiong region in the southwestern province of Yunnan, noted Zuji.
By 2020, China is targeting per capita insurance premiums of CNY3,500 ($568.4) and the ratio between total premiums and gross domestic product to reach 5%, reported Reuters.
Image: China testing new catastrophe insurance system. Photo: courtesy of Danilo Rizzuti/ FreeDigitalPhotos.net.