The absence of catastrophe insurance should no longer be neglected, major Chinese insurance companies and professors said during an insurance forum in Beijing.

The discussion, which took place on June 6, focused on the fallouts of the May 12 Sichuan earthquake. It put the spotlight the issue of catastrophe insurance.

Natural disasters are frequent in China. Union Nation statistics show that eight out of the 54 worst natural disasters in the world occurred in China. Over the years, the Chinese government has shouldered most of the resulting economic loss. This year, the Chinese government is spending 70 billion Yuan in relief and restoration work in Sichuan.

However, relying on government funds alone is not the best way of dealing with post-disaster reconstruction, said Xu Wen-Hu from Fudan University.

"It is necessary to channel financial support to disaster-hit areas. But it is not the best way to solve all problems because that means the government has to stop other projects to cope with emerging issues. A national government cannot only deal with disasters," said Xu Wen-Hu, who submitted two reports about catastrophe insurance to the Chinese government.

However, the absence of catastrophe insurance leaves little options for China to deal with economic losses caused by such disasters.

According to statistics, Chinese insurance companies provided only 2.3 percent of the total amount spent on relief efforts following the snowstorm disaster earlier this year. They are estimated to provide even less money for post-quake restoration work in Sichuan.

Insurance companies feel that offering catastrophe insurance is their responsibility.

Shen Kaitao, board chairman of Jiang Tai Insurance Broker Ltd, said:

"Although catastrophe insurance is a public product, it is not the job for the government alone. To solve problems, commercial insurance needs to participate. Since reform and opening-up, various Chinese insurance firms have grown and raised public concerns on risk control. So I think the base to build catastrophe insurance is mature."

Xu Wen-Hu said the government needs to lead the way in setting up a catastrophe fund. He suggested the government consider setting up the fund as a long-term goal.

"Setting up a catastrophe fund is a long-term task which strongly contrasts our traditional methods. Considering their limited financial power, governments and companies may prefer to compensate losses after a catastrophe occurs. However, according to our calculations, if we accumulate a catastrophe fund over several years, we could better deal with deadly earthquakes in the future."

Overseas catastrophe insurance giants AIR, RMS and EQECAT have entered the Chinese market, bringing their years of expertise in the field.