The earthquake in central China’s Sichuan province killed an estimated 50,000 people and, according to the Chinese government, caused direct losses to Chinese companies totaling $9.5 billion. The total damages exceeded $20 billion and only about 5% were insured. Unfortunately, the reeling US economy is hurting charitable donations to China and its rebuilding efforts.
“Charitable giving does follow the economy, and the tightening of the economy has impacted the donations our organisations receive, ” said Sam Worthington, president and CEO of disaster relief coalition InterAction.
This tragedy highlights the lack of insurance carried by most Chinese citizens. As the middle class in China grows, insurers like AIG (AIG) hope to make inroads.