The vast majority of China'spopulation lies to the southeast of a line running fromBeijing to Sichuan. This entire region is subjected to majorfloods each year, while typhoons affect the southern andeastern coastal areas and major earthquakes affect thewestern and northern margins. The average annual directproperty damage is estimated at approximately USD 15billion, and when combined with other immediate economiclosses, including business interruption, disaster relief,and other costs, is considerably larger. As with othersectors, insurance in China is growing rapidly, with acompounded annual growth rate of 25 percent since 2001. Theproperty insurance industry, nevertheless, isunderdeveloped. Total property premiums in China are aboutUSD 15 billion, whereas the losses from the Wenchuanearthquake alone are likely to exceed USD 100 billion.According to most estimates, only 5 percent of property inChina is insured, primarily among commercial and industrialusers. When it comes to private dwellings, it is estimatedthat today only 1 out of 100 is insured against naturalhazards. Clearly, the current property insurance market inChina is dwarfed by the nation's need for catastropherisk protection; at the present level of insurancepenetration, China's insurance industry cannot providesignificant compensation for large natural hazards losses.
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