The Chinese Government is to establish a catastrophe fund and reinsurance pool with a role for private insurers.

The State Council – the nation’s leading administrative body – has also set of target of 5% insurance penetration by 2020, compared with 3% now, according to the government-run China Daily.

Insurance penetration shows total premium as a percentage of gross domestic product.

China’s premium per head of population is forecast to grow to 3500 yuan ($611) in 2020, compared with 1266 yuan ($221) now.

The report says some local governments have conducted trials to manage catastrophe risk.

Swiss Re and the Shenzhen city government in southern China have developed a policy to compensate residents injured in natural disasters.