Taiwan Today

Typhoon Morakot’s destruction has revealed very low levels of typhoon and flood insurance coverage in Taiwan, especially in rural areas. In the 362 towns and cities throughout the country, in 113 of them, or nearly one third, fewer than 10 properties are covered by typhoon and flood insurance. A U.N. Office for Coordination of Humanitarian Affairs report estimated Taiwan’s total losses due to the typhoon at US$3.4 billion—around NT$100 billion. Meanwhile, the Cabinet has earmarked a reconstruction fund of NT$100 billion, to be used over three years. In comparison, in the property and casualty insurance sector, by Aug. 21 only 464 claims, amounting to NT$1.5 billion, had been filed. Experts said this discrepancy points up Taiwan’s dependence on the government in the face of natural disasters and the embarrassing failure of the insurance industry to share risks and damage control. “It is time now to consider including typhoon, flooding and agricultural insurance in compulsory natural disaster insurance,” said Frank Lin, a former Financial Supervisory Commission member and expert in this field. Few types of natural disaster insurance are available in Taiwan and none of them are mandatory, he added. A homeowner must first buy fire and basic earthquake insurance, for example, in order to add coverage for typhoon and flood risks. However, only around 1.98 million of all 7.66 million homes in Taiwan are covered by fire insurance. Among those insured, 1,694 purchased additional typhoon and flood insurance, which means only two out of every 10,000 residences are insured against these natural disasters. Added to the lack of coverage is a discrepancy between urban and rural areas. Official figures show that in the counties of Chiayi, Pingtung, Taitung, Kinmen and Lienchiang, the number of towns with fewer than 10 flood insurance policies represents more than 50 percent of all towns under their jurisdiction. The first three of those counties are among the areas hit worst by Morakot. In the other two hardest-hit counties, Nantou and Kaohsiung, townships with fewer than 10 flood and typhoon insurance policies make up 38 percent and 37 percent of all communities, respectively. The insurance premiums for natural disasters such as typhoons, floods and earthquakes could be a great burden for people living in remote areas, according to Cliff Yang, chairman of the fire insurance committee of the Non-Life Insurance Association of the ROC and vice president of Fubon Insurance Co. Insurance premiums are established based on losses in the past decade due to tropical storms and earthquakes and divided by the number of households in a community, Yang explained. He said the annual premium might reach NT$5,000, with up to NT$2,000 for fire insurance and NT$3,000 for the additional typhoon and flood disaster insurance coverage. (PCT-THN)