The gap between uninsured and insured risk continues to be an issue for the region. Insurance and reinsurance penetration rates remain low in many Asian countries. As the chart below shows, purchases in catastrophe reinsurance limit have grown, but in actual value terms the majority of growth is in territories with the highest levels of protection already.
In simple terms, a comparison of catastrophe reinsurance treaty limit with country GDP reveals that New Zealand, Australia and Japan enjoy the greatest level of protection at 2.6 percent, 1.5 percent and 0.75 percent of GDP, respectively. For India and China, these figures are 0.16 percent and 0.03 percent, respectively, showing a significant protection gap. The number for the United States is just over 0.5 percent. If China bought cover at the same level as the United States, the total catastrophe treaty limit required for the territory would be more than USD 60 billion, about 20 times the current purchase.