By South China Morning Post | Created at 2025-04-03 12:31:10 | Updated at 2025-04-04 18:11:15
1 day ago
Asia is at a critical juncture. As natural disasters increase in frequency and intensity, the region remains dangerously underprepared, leaving communities, economies and industries vulnerable, especially the insurance sector.
This year, events such as the magnitude 7.7 earthquake in Myanmar, which affected neighbouring countries such as Thailand, the magnitude 6.8 earthquake in Tibet, wildfires in South Korea and Japan, and severe snowstorms across East Asia have resulted in widespread destruction and loss of life. These disasters highlight significant shortcomings in preparedness and response systems.
Globally, the financial impact of natural disasters is increasing. According to reinsurance company Munich Re, economic losses surged to US$320 billion last year, up from US$268 billion in 2023 when adjusted for inflation.
As more frequent and intense hurricanes, wildfires, floods and typhoons wreak havoc on lives, infrastructure and economies, the result is higher losses, soaring insurance premiums and reduced or unavailable coverage in many regions.
Insurers are increasingly withdrawing from high-risk regions, leaving governments, businesses and individuals to face uninsurable risks. In California, wildfires driven by prolonged droughts, extreme heat and changing weather patterns have prompted many insurers to exit wildfire-prone areas.
The recent Los Angeles wildfires alone resulted in estimated insurance losses of up to US$50 billion. Homeowners are being forced to rely on the state’s Fair Access to Insurance Requirements (FAIR) plan, a last-resort option poorly equipped to manage growing claims and which faces the risk of insolvency.
