August 12th, 2010

Floods in China

Posted at 10:54 AM ET

china-flood-aug-smallChina’s worst seasonal flooding for a decade has left more than 2,100 people dead or missing country-wide and has necessitated the evacuation of a more than 12 million others, according to Chinese government sources. Reports say that to date, the flooding, triggered by unusually severe monsoonal rains, have caused tens of billions of dollars in damage across 28 provinces and regions of China. The current flooding is reported to be the worst experienced in China since 1998, when more than 4000 people died and 18 million people were displaced.

Figures released on August 6 from the Chinese Ministry of Civil Affairs estimate that flood-triggered disasters this year have caused more than 1,450 fatalities and left 669 people missing. The ministry estimates that flood-related disasters have destroyed 1.36 million houses and 2.09 million hectares of crops, with a further 13.47 million hectares of farmland badly damaged. As of August 6, the ministry estimated the total loss to the economy as a result of the floods at around 275 billion Yuan (USD 40.6 billion).

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Hazard data illustrated in the CAT-i map was taken from i-aXs®, Guy Carpenter’s web-based risk management platform. i-aXs users can view impacted areas on any map as well as see how their portfolios were affected. Please contact your broker or Instrat® representative for assistance or go to www.i-axs.info for further information.

Weeks of unusually severe seasonal rain across China has swollen rivers leading to flooding and landslides that have caused loss of life, the destruction of homes and infrastructure across a swathe of the country. The Chinese Flood Protection Scheme said in a recent report that so far this summer, record-high water levels have been recorded for 25 rivers. Flooding has been severe along central China’s Yangtze River basin during July. At the end of July, it was reported that water levels in one tributary of the Yangtze were the highest in 30 years. The Yangtze’s massive Three Gorges Dam was also put to the test since it was opened four years ago. As flood waters pushed the dam’s reservoir to near-capacity, engineers had to release vast amounts of water from behind the dam, to make room for more flood water in the reservoir, prompting authorities to warn communities downstream to prepare for rising water levels.

In the middle of July, the heavy rain triggered landslides that caused destruction in southern and central Chinese provinces. Reports at the time said that five landslides occurred in Yunnan, Sichuan and Hunan provinces, causing around 40 fatalities and leaving the same number missing. The town of Xiaohe, in Yunnan province was worst-affected, where 13 people were killed and houses were buried after the side of a mountain collapsed. Villagers elsewhere in Sichuan province were evacuated as reservoirs overflowed and troops were called in to blast dykes to prevent further flooding. Landslides were also reported to have hit rural communities in Sichuan and Hunan provinces, where a total of 24 people were reported to have been killed.

Flooding was also reported to have affected vast areas of the country in the middle of July. In Jiangxi province, 10,000 people had to be evacuated from villages in the north after rain triggered flash-floods that caused three reservoirs to overflow. To the north, in the province of Anhui, troops blew up part of a dyke on a swollen branch of the Yangtze River, to prevent floodwaters from flowing into riverside villages. Elsewhere in the province of Qinghai, troops managed to successfully divert water from an overflowing reservoir into a drainage channel, allowing the water to subside. Previously, 10,000 people had been evacuated from the area and it had been feared that flooding could knock out power to the nearby city of Golmud.

Towards the end of July, the provinces of Henan and Hubei in central China were also affected by the torrential rains. 33 bodies were recovered after a bridge collapsed in a village in Henan province, where, according to reports, the area had seen the heaviest rain in 100 years. Further south in Hubei province, workers in the city of Wuhan were sandbagging rivers to try to prevent flooding at the confluence of the Yangtze and Han rivers. Meanwhile in the north-eastern province of Jilin, 30,000 people were trapped in Kouqian town when torrential rain caused two rivers and a reservoir to overflow. Furthermore, in the city of Jilin, floodwater was reported to have washed 1,000 barrels of explosive chemicals into the Songhua river.

On August 7, at least 3 villages were destroyed by a landslide caused by a continuation of the torrential rains in a remote and mountainous area of Gansu province in China’s north-west. Recent reports state that 702 people have now been confirmed dead, with a further 1,000 still missing. The county of Zhouqu in the Gannan Tibetan Autonomous Prefecture was reported to be hardest hit, where more than 300 buildings were buried under mud and 66 percent of the county remains without power. In Zhouqu, reports say that 45,000 people have been evacuated and 7,000 soldiers, fire fighters and medical staff have been deployed in the emergency rescue plan. Hopes of finding more survivors from the landslide were fading with the National Meteorological Cente forecasting up to 90 mm of rain for August 13, bringing the possibility of fresh landslides. The number of dead and missing as a result of this latest disaster will add to the official figures quoted from the Ministry of Civil Affairs.

Although the economic losses from these flood-related disasters are huge, there is not likely to be a large impact on the insurance industry. According to a recent study by Munich Re, although the 10 largest floods in China since 1980 have caused total economic losses of USD 135 billion, the insured loss has only been 1 - 2 percent of this amount. The report quotes low insurance penetration in rural areas of the country and the fact that official efforts are directed at protecting economic, rather than human assets from flooding, as major drivers of this trend.

Sources: Agence France Presse, Associated Press, AXCO Insurance Reports, BBC News, Best’s Insurance News, Chinese Flood Protection Scheme, Chinese Ministry of Civil Affairs, The Economist, Munich Re, Pittsburgh Post-Gazette, Reuters News, Xinhua News Agency.

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