Survivors trying to rebuild their lives from China's devastating earthquake are short of one critical aid _ insurance.
Few among the 28 million people living in the Belgium-sized disaster area in Sichuan province have life or property insurance. That will slow rebuilding efforts and force many to rely on government assistance.
In the quake-hit town of Dujiangyan, fabric salesman Wang Yong lost his store, apartment and delivery van. Like many local residents, he said he has no insurance.
"Our home has been condemned and we don't have any money to buy a new one," said Wang, a wiry, rugged man, who now lives in a hot prefabricated house with his teenage son and wife.
Estimates of the devastation are still being compiled, but AIR Worldwide, a catastrophe risk modeling firm, puts the loss at over US$20 billion (12.7 billion). It estimates that that just 5 percent of the losses were covered by insurance.
The Chinese government has already announced a 70 billion yuan (US$10 billion; 6.4 billion) fund for reconstruction. The government also has told state banks to forgive debts owed by survivors of the quake who lack insurance.
The expense is causing the government to think about the next quake, dusting off plans for a state-subsidized earthquake insurance pool.
The loss of wealth caused by the May 12 earthquake in China "reveals the importance and urgency of establishing an earthquake insurance system," the China Insurance Regulatory Commission said in a statement. "A mechanism to spread risk that suits China needs to be quickly established."
The insurance industry here is in its infancy.
Despite the rising number of Chinese who can own homes _ and a construction boom spurred by rapid economic growth _ awareness about insurance is still low, especially outside Beijing and Shanghai.
Owning private property was only fully given legal protection in 2004, and many grew up under a system where cradle-to-grave employment and related benefits were provided by the government.
Insurance companies have received just over 200,000 claims related to the earthquake, 27,500 of them for homes _ representing just a fraction of the damage.
Companies and individuals can buy earthquake insurance in China as an extra to property and home insurance, but analysts say it has not had enough backing from the government or reinsurance companies to make consumers believe there will be a reliable payout or that the fees are calculated correctly.
People also are used to the government providing reconstruction money after natural disasters, whether earthquakes or floods.
"Buying insurance in China fullstop is low, but earthquake insurance is even lower than that," said Domenico del Re, senior model manager at the London office of Risk Management Solutions, which researches catastrophe risk and has advised the Chinese government on earthquake insurance.
"But I suspect that this earthquake will actually bring to the surface a lot of lessons that can be learned in terms of widening the coverage of earthquake insurance," he said. "This is the first earthquake that has impacted modern China."
Analysts said any state-subsidized quake insurance program would likely involve international reinsurance firms who have the global reach to support such a scheme.
"That's very much a consensus, overseas reinsurance companies should definitely play an active role like in other markets," Wang Zhen, head of German reinsurance company Munich Re's China division. The company is in talks with the government and expects fast progress, she said.
The world's largest reinsurer, Swiss Reinsurance Co., is also having close talks with the Chinese government, but would not provide further details.
China suffers about 200 billion yuan (US$29 billion, 18 billion) in economic losses each year from disasters such as earthquakes, floods, and typhoons, official Xinhua News Agency quoted the director of China Meteorological Bureau saying last August.
Twenty-three of its 31 provinces are prone to earthquake risks, according to the insurance regulator.
Hao Yansu, head of the insurance department at the Central University of Finance and Economics, said the government-sponsored plan had taken on increased urgency in the wake of China's snowstorms that wreaked havoc on the country this winter.
The government would provide subsidies to the insurance companies or to people who buy catastrophe and earthquake insurance to keep costs down, Hao said.
In the past few years China has looked at government-supported earthquake insurance pools set up in other countries, like Turkey, analysts said.
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Associated Press writer Christopher Bodeen contributed to this report from Dujiangyan
