Swiss Re offers disaster expertise

These two reinsurers proposed to establish a Natural Catastrophe Pool. In which, an insurance pool is a collective pool of assets from multiple insurance companies as a way of providing high risk insurance. Alone, the companies could not afford the risk of taking on high risk accounts.

But by pooling their assets with other companies, they can afford to extend such coverage and to offer a higher level of coverage. Pooling is a commonly utilised tactic for high risk insurance management.

According to Swiss Re, this form has been applied in many countries. For example, Mexico with MultiCat, funding for immediate relief efforts after disasters, Caribbean with Caribbean Catastrophe Risk Insurance Facility (CCRIF) and Asia-Pacific with Pacific Disaster Risk Insurance Facility (PDRIF).

These insurance pools operated in form of parametric insurance, in which the loss payment after an event is determined by a pre-agreed, independently verified, measurable parameter. It is different from traditional insurance, in which, the loss payment after an event is determined by inspection of the incurred damage.

Carribbeab's CCRIF choose how much coverage they need up to an aggregate limit of $100 million while insurance coverage under PDRIF is $45 million.

"An insurance pool is considered a good solution for disaster insurance and reinsurance," said Thomas Kessler, Vinare deputy director.

In 2013, Vinare will work with the Ministry of Finance and other foreign and domestic insurance companies to set up and develop solutions on legal frame as well as learn experience in the regional countries on disaster insurance in Vietnam.

According to Vietnam New Brief Service in early January 2013, Vietnam lost an estimated VND7 trillion ($333.3 million) from natural disasters in 2012.

In recent years, natural disasters have appeared more frequently and severely in Vietnam, where massive constructions of transportation, irrigation, and hydropower systems, civil construction works, socio-economic projects, and industrial parks have worsened the negative impacts of such natural phenomena.

According to the United Nations, in 1990-2010 Vietnam ranked sixth among countries suffering the biggest losses from disasters with 445 deaths worth $1.8 billion per year.