A newspaper report about Insurance Coverage and Catastrophe Claims following the Sichuan earthquake in China, highlights issues important to people in the United States who face the real possiblity of having to make Catastrophe Claims.
Concentrating on two types of Insurance, it is reported that holders of Property Insurance Policies are left with little more than uncovered Catastrophic Damage, while the much smaller group of Chinese Life Insurance Policyholders have fared much better. Life Insurance Policies in China, as elsewhere including in the United States, generally pay benefits upon an accidental death regardless of cause. Earthquakes as a cause of loss are almost always Excluded in Property Insurance Policies in China, however.
"[A]s in California," in order to obtain Coverage for losses caused by Earthquakes, for example, "you have to buy a special policy and pay extra." "In China, Few Are Covered by Earthquake Insurance," by Don Lee (Los Angeles Times Online, Tuesday, June 24, 2008).
These differences are illustrated in the newspaper report by convincing numbers. First, so far about a quarter of a million Property Insurance Claims have been presented to China Property Insurers as a result of this Catastrophe. Most of those CatClaims are reportedly on account of damage to personal property. In addition, some Three Million houses were destroyed. Approximately $15 Billion to $20 Billion of Property Damage is estimated as a result of the Sichuan earthquake. Property Insurance Companies have paid out $20 Million in CatClaims.
With regard to Claims on Life Insurance Policies, on the other hand, an unreported number of Claims has been presented since the Sichuan earthquake. It is reported that "only a tiny fraction of people hold such policies." Reportedly, Life Insurance Companies paid out $26 Million in Claims resulting from the earthquake.
Finally, it is of more than passing interest to Homeowners seeking Property Insurance Coverage outside of China, that the Earthquake Exclusion was reportedly adopted after a 1996 meeting of "earthquake scholars" and "experts". In that meeting, participants predicted that earthquakes would trouble China for the next ten to twenty years. The Property Exclusion was almost immediately written in response, it is reported.
In the United States, one of the central and largely unreported battlegrounds concerning Property Insurance Coverage, particularly for CatClaims, has been the use of new Catastrophe Models that result in predictions of more Catastrophes such as Hurricanes, and in higher Premiums or Exclusions, than seem justified by authorized and fact-based Catastrophe Models that have been relied on by Insurance Departments, Insurance Companies, Agents and Brokers, and of course ultimately, relied on by Policyholders. Events associated with that battleground and other largely unreported areas of interest to Insurance Coverage for Catastrophes have been reported here in the categories of "CatClaims" and "Catastrophe Models," along with "Property Insurance" and many other related kinds of Insurance.
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