Global Climate Governance and Disaster Risk Financing : China's Potential Roadmap in Transitional Reform

Insurance industry participates in the United Nations December 2015 climate conference in Paris and offers products that are regarded as essential to financial resilience in the face of climate disaster risk. In China, however, the government traditionally has played the central role in catastrophe disaster aid, relief, and compensation. Nonetheless, the government's Whole-Nation System needs reform and a shift to an insurance-based model because (a) the current system is not financially sustainable; and (b) a private insurance system would do a better job than government regulation alone in mitigating climate change risks. To accomplish this shift, the Whole-Nation System (regulation by government) should be combined with catastrophe insurance (regulation by insurance) to capitalize on the strengths of the private market and public government oversight. Under such a proposed hybrid system, the government should support private sector efforts to make catastrophe insurance the key vehicle for the financing and loss mitigation of climate change risks