Typhoon insurance in Hainan: one contract can save you from nightmare

Our attention was drawn to the Chinese island province of Hainan in mid December, when a unseasonal typhoon was forecasted to hit the province, causing citizens to be wary and businesses to buckle down. Fortunately, on December 21st, 2021, the China Meteorological Administration (CMA) officially lifted the alert and announced that the much-dreaded typhoon Rai would not make a landfall in Hainan. The authority forecasted that Rai will turn to track east as it weakens into a tropical depression and dissipates off the coast of Guangdong Province. The news came as a relief for residents who went through a week of emergency precautions and mental strain. Though this time around, Hainan was in the clear, the island is nonetheless always a frequent victim of typhoons. Hence, it’s wise for businesses to consider typhoon insurance in Hainan.

Source: AccuWeather, the path of the most recent typhoon Rai, which narrowly avoided Hainan Province

Hainan is a frequent victim of typhoon disasters

According to Hainan government, there are on average 6.2 typhoons lashing Hainan each year. Dragging violent winds, heavy rain and huge waves and causing massive flooding, typhoons threaten the safety of various buildings, infrastructures and people’s lives. They can also cause logistics disruptions due to destroyed or flooded roads and power out. In October 2016, Typhoon Sarika battered Hainan. More than 520000 people were evacuated from the path of the storm system as it bore down the island. Nearly 203 millimeters of rain fell on Haikou, the capital of the island province, within one day. The severe weather forced the cancellations of all flights to and from Hainan’s Meilan International Airport. As a result of Sarika, Hainan suffered an economic loss of 4.56 billion RMB.

It’s vital to get enough preparations to live through disasters, including purchasing insurance.

In this article, we will share insights about business purchasing typhoon insurance in Hainan.

Businesses are under-insured in Hainan

Businesses in Hainan are generally under-insured, despite being a frequent target of typhoons which cause billions of Chinese yuan in economic losses. Typhoons can result in water damage from flooding, building and machinery damage from strong winds, and cause a major loss in productivity. Hainan is an industry base for many industries such as petrochemicals, chemicals, pharmaceuticals, machinery electronics and much more, all of which can be seriously harmed from losses.

In actuality, under-insurance is common all over China, not just Hainan. According to data from Asian Risk Management Service  (ARMS) and Statistica, in 2019, only 2 percent of natural disaster economical losses are insured in China, compared to 42% in USA and 31.2% worldwide average.

Categories of typhoon insurance products

Generally speaking, insurance products available to businesses in Hainan can be roughly put into 3 categories.

All Risks insurance package: Contracted to take care of all types of damages. Just be mindful of the exclusive clauses. For example, claims submitted beyond 48 hours after the incident occurred won’t be compensated for.

Specific risk insurance package: Insurance that only compensates for one specific type of losses, such as health insurance, property insurance and car insurance.

Catastrophe insurance package: Target major nature disasters (earthquake, typhoon, flood etc.). Most other insurance policies cover only named perils, which can vary policy to policy and by insurance company. Even an ‘all perils’ policy can contain specific policy limits, so buyers may not be fully insured for a major loss. That’s when catastrophe insurance comes in. It’s worth mentioning that catastrophe insurance system in Hainan is still in its infant stage but is developing fast and prospective in the future.

Product highlight–A mobile parametric insurance under the partnership of Ping An & Swiss Re

Among the countless insurance products released to the market in the past few decade, the mobile parametric insurance under the partnership of Ping An & Swiss Re is one of the most innovative and convenient products in terms of accelerating post-disaster recovery.

‘We want to leverage on our experience in using cutting-edge technology to develop tailor-made solutions’, said John Chen, President of Swiss Re China. As China’s first ever mobile-enabled parametric cover, released in 2017, this insurance solution can track typhoon paths and wind speed in real time, providing automated claims to users based on public data, all thanks to its catastrophe modelling and data analysis capability.

This self-service automated claims system works through an inquiry page — where, after a typhoon hits, customers can check if claim terms have been triggered and then submit a claim which is automatically calculated and settled within three days. Due to its efficiency and high level of accuracy, this can be a perfect go-to option when purchasing typhoon insurance in Hainan.

Key takeaways about typhoon insurance in Hainan

  • Hainan is home to many industries that can be seriously impacted by natural disasters like typhoons.
  • Many businesses in Hainan are under-insured, yet typhoons frequently hit the island and cause billions of Chinese yuan in damage.
  • Insurance products are generally put into three categories: All risks insurance package, specific risk insurance package and catastrophe insurance package.
  • There are many options for Typhoon insurance in Hainan which can be acquired through the help of the insurance broker like ARMS.

To manage your business risks so you can optimize your growth, insure your business today, please contact ARMS.

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