Reflecting on the Henan floods: How you can protect your business with flood insurance in China
Starting July 17th 2021, the northern Chinese province of Henan has been affected by severe flooding. Caused by extreme rainfalls (617mm in just three days) at the time of writing the floods caused 302 deaths and direct economic losses of at least 114 billion RMB in Henan with 580 thousand hectares of farmland affected. Although the Henan floods were particularly rare by their intensity, weather-related disasters are quite common in China due to its tropical climate. Due to a relatively low insurance penetration rate, natural disasters still are very costly for businesses in China. Although nothing can replace the precious lives lost, in the Henan floods case, insurance companies have stepped up coverage for disaster relief. In this article we will which kind of insurance policies can cover damages caused by floods in China and what did Chinese insurance companies do to help with the Henan floods crisis.

What kind of loss can be indemnified, and by which type of insurance policies?
Fortunately, damages caused by floods and other natural disasters are not considered as “force majeure” circumstances when it comes to insurance in China. This means that insurance contracts are not voided in case of natural disasters, like they could be during exceptional circumstances like war time for example. Although dedicated flood insurance in China exists, these contracts are usually used for agricultural insurance and are quite rare; thankfully other types of insurance contracts can cover damages caused by floods.
- Life and health insurance: Injuries, and deaths in the most unfortunate events, are covered by standard health and life insurance contracts. Whether it be the mandatory social health insurance plan or an optional plan, coverage is provided as long as the claim is made within 10 days of the accident.
- Car insurance: Many cars were swept away by the Henan floods in Zhengzhou and the surrounding cities, making the vast majority of property claims during the crisis. Commercial car insurance contracts in China often cover damages caused by external factors such as natural disasters. Although it is worth mentioning that the mandatory liability car insurance does not cover such damages.
- Property insurance: Standard housing and corporate property insurance contracts in China all usually cover natural disaster damages.
- Crop insurance: Agriculture is one of the most impacted industries in China when it comes to natural disasters with more than 1.4 million hectares of crops destroyed in 2019 alone. Agricultural insurance covers such damages, but although coverage has widened in China in recent years, insurers’ liability is still relatively low.

How Chinese insurance companies have helped with the Henan floods crisis?
Easier claims and charity donations
Estimated compensations paid by Chinese insurers for the Henan floods crisis neared one billion USD. Local branches of major Chinese insurers such as China Life, Ping An, PICC and China Pacific have all open a “green channels” for claims. These channels allow for faster and easier claims so that people can be indemnified as early as possible. They also removed restrictions on hospital fees and drug reimbursements. Flood insurance in China is also partly powered by public and private donations and relief funds. In the case of this July’s floods in Henan, several Chinese insurers have created several funds destined to victims of natural disasters. For example, Taikang and Fosun gave both 50 million yuan respectively while other platforms have launched flood prevention programs that policyholders can subscribe to and claim for free with a coverage going up to 200,000 RMB of property damages caused by the floods.
Going beyond insurance services
Outside of making their claim process easier and contributing to relief funds, local insurance branch in Henan have also dedicated their resources to contribute to the rescue efforts. For example, PICC has organized 41 working groups dedicated to rescue vehicles and facilitate settlements. Meanwhile, Ping An has established an emergency call center and rescue teams to retrieve flooded vehicles. They are among many other domestic companies that contributed to relief efforts in Henan either by sending supplies or making donations, such as Alibaba that donated 23 million USD.

Takeaways about the Henan floods and flood insurance in China
- The devastating floods that occurred in July in Henan have caused significant property damages across the province. Among them, damages to vehicles have been recorded to be the most significant.
- Damages caused by natural disasters are covered by most P&C and health insurance contracts, but a lot of people in China do not subscribe to such policies.
- The agriculture sector, which is one of the most impacted by floods in China, has gradually adhered to subscribing to insurance in recent years. Despite that trend being on the rise across the country, coverage and insurer liability remain relatively low in China, which leads to large uninsured losses every year.
- Like it is often the case after a natural disaster in China, local insurance companies and other corporate entities have contributed to relief efforts by donating to relief funds and participating in rescue efforts.
Contact Asian-Risks to find your ideal natural disaster insurance plan in China.
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