Natural disasters, particularly catastrophic ones, cost tremendous loss of real property. In China over the recent ten years, natural disasters such as earthquake, flood, typhoon, debris flow and landslide, have impacted the country in real physical property loss, physical damage of land and building, and, loss of legal rights to private property. In the current state of affair, the Chinese central government is the main organisation that takes the responsibility of post-disaster loss relief. Insurance/private-public rescue cooperation has not grown in tandem with the need of the market to take over this responsibility from the central government. Therefore, there is a current debate on whether there is a need for private sector to take some responsibilities for an effective loss relief in China. At the same time, loss relief focus is mostly on the post-disaster phase, while in the pre-disaster phase, disaster reduction is not substantially highlighted.

In order to minimize disaster on the impact to the population and loss of property, a robust national system of governance from strict regulations/building codes are applied in planning stage to prompt first response when disasters, i.e. earthquake or flood, need to be put in place on a national/local level in order to reduce risk to property loss and loss of lives beforehand. Meanwhile, In the post-disaster phase, the collaboration of the public and private sectors is vital to mitigate the loss in the first response. If implemented, this holistic approach both from pre-disaster to post-disaster and from top-down to bottom-up will benefit the nation, which will be sustainable in the long run.

This paper will answer the research question of “How should the loss-relief system work in the face of natural disasters under the domain of good disaster governance?”.

In this paper, crucial issues, i.e. the degree of loss caused by natural disasters, value loss in real estate valuation, building code and regulations, current loss relief approaches e.g. insurance products of property casualty, the government’s and private sector’s capacities to respond to disasters, i.e. earthquake, flood, are discussed in detail.

The methodologies adopted in this research paper will include:

• Literature review of residents’ awareness of disasters, importance of good disaster governance through insurance, insurance products’ design and governments’ role in the loss relief;
• Interview of stakeholders in the aspect of disaster loss relief, i.e. insurers, insurees, etc. to test the mechanism of the current relief system.

The paper will propose the improvement of the current relief system in the following aspects:

• Capacity building at the government level e.g. building code and regulation, disaster education, loss-relief policy, subsidy, compulsory insurance, local jurisdiction authorization and etc.;
• Insurance and reinsurance improvement at the private level;
• Voluntary mutual arrangement, donations and NGO at the public level, particularly for the poor.