The Lloyd’s Risk Index 2013 is based on a global survey of over 500 C-suite and board level executives conducted by Ipsos MORI for Lloyd’s during April and May 2013.
In 2013, as the effects of China’s relative economic slowdown take hold, the number one priority in the country has become the price of material inputs. The risk to business posed by talent and skills shortages is still a major concern at number two, but one of the most significant changes in the entire 2013 Risk Index is found at number three – supply chain failure. This has moved an extraordinary 31 places up the list since 2011.
As exports have slowed, Chinese businesses have focused more on domestic markets for growth. Inconsistent regional distribution facilities, infrastructure and logistics have long posed problems for the internal Chinese market. Additionally, scandals – particularly food scandals – have heightened Chinese business awareness of the risks of weak or poorly controlled supply chains.
Finally, the impacts of natural catastrophes over the intervening two years have become even more explicit. In 2012, the extensive flooding between April and August and the impact of Typhoon Haikui between them affected over 27 million people in 2012, while so far 2013 has been characterised by further flooding, landslides and another earthquake in Sichuan Province.
The Lloyd’s Global Underinsurance Report - published in December 2012 - shows that China is severely underinsured against the costs of natural catastrophes, coming 34th out of the 42 countries analysed. Non-life insurance penetration in China as a percentage of GDP stands at 1.2%.
While the average uninsured cost of catastrophe in China is US$18.91 billion, the gap for China in 2011 was a staggering US$79.57 billion. The implications of these figures indicate the scale of the challenges and opportunities facing domestic and international insurers alike.
Category: Climate/natural disasters: Earthquakes, Floods/storms, Other