Munich Re has called on China to set up a catastrophe protection body similar to New Zealand’s Earthquake Commission.

“China is exposed to a very wide amount of catastrophe risk,” CEO Nikolaus von Bomhard said last week. “We think there should be a public-private partnership for earthquake cover particularly.”

Munich Re sees China as a major growth market, expecting it to be second to the US by 2020. Mr von Bomhard says its business there is growing about 20% a year, mainly through reinsurance to local insurers that are short of capital.

The market is still undeveloped. A 2008 earthquake in Sichuan province killed 100,000 people and caused $US85 billion ($83.5 billion) damage, while insured losses were only $US300 million ($294.6 million), Munich Re says.

The company is wary of catastrophe risk after the Thai floods cost it $US621 million ($609.7 million) and the New Zealand and Japanese quakes cost $US1.86 billion ($1.83 billion) last year.

Public-private partnerships share risk between governments and private insurers, allowing affordable cover in under-threat areas.